Almost Sure Convergence to Zero in Stochastic Growth Models

Kamihigashi, Takashi

Almost Sure Convergence to Zero in Stochastic Growth Models

No 140, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper shows that in stochastic one-sector growth models, if the production function does not satisfy the Inada condition at zero, any feasible path converges to zero with probability one provided that the shocks are sufficiently volatile. This result seems significant since, as we argue, the Inada condition at zero is difficult to justify on economic grounds. Our convergence result is extended to the case of a nonconcave production function. The generalized result applies to a wide range of stochastic growth models, including stochastic endogenous growth models, overlapping generations models, and models with nonconcave production functions.

Keywords: Stochastic growth; Inada condition; Convergence to zero (search for similar items in EconPapers)
Pages: 11 pages
Date: 2003-09
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Citations: View citations in EconPapers (3)

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https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp140.pdf First version, 2003 (application/pdf)

Related works:
Journal Article: Almost sure convergence to zero in stochastic growth models (2006)
Working Paper: Almost sure convergence to zero in stochastic growth models (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:140

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