On the Stability of Balanced Growth

Jan Wenzelburger (), Volker Boehm and Thorsten Pampel
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Volker Boehm: Dept. of Business Administration and Economics, Bielefeld University,, Postal: Postfach 100 131, D-33501 Bielefeld, Germany.
Thorsten Pampel: Dept. of Business Administration and Economics, Bielefeld University,, Postal: Postfach 100 131, D-33501 Bielefeld, Germany.

No KERP 2007/09, Keele Economics Research Papers from Centre for Economic Research, Keele University

Abstract: Common folklore in growth theory suggests that the stability of balanced growth paths in the capital-labor space is essentially guaranteed by conditions which imply stability of the corresponding steady states of the models in intensity form. We show by means of simple examples that, in general, these well-known conditions are only necessary. For a class of deterministic growth models with discrete time we provide new structural insights into the nature of this phenomenon by stating additional requirements that ensure stability of balanced growth paths in the original capital-labor space. We introduce a notion of path-wise convergence for stochastic growth models and generalize our sufficient conditions to the stochastic case.

Keywords: Balanced growth; stability conditions; stochastic growth; pathwise convergence. (search for similar items in EconPapers)
JEL-codes: O41 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-08
New Economics Papers: this item is included in nep-dge and nep-mac
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