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LONG-RUN OPTIMAL BEHAVIOR IN A TWO-SECTOR ROBINSON–SOLOW–SRINIVASAN MODEL

Published online by Cambridge University Press:  05 December 2011

M. Ali Khan  and
Tapan Mitra
M. Ali Khan
Affiliation:
The Johns Hopkins University
Tapan Mitra*
Affiliation:
Cornell University
*
Address correspondence to: Tapan Mitra, Department of Economics, 448 Uris Hall, Cornell University, Ithaca, NY 14853, USA; e-mail: [email protected].
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Abstract

This paper studies the nature of long-run behavior in a two-sector model of optimal growth. Under some restrictions on the parameters of the model, we provide an explicit solution of the optimal policy function generated by the optimal growth model. Fixing the discount factor, we indicate how long-run optimal dynamics changes as a key technological parameter (labor output ratio) changes. For a particular configuration of parameter values, we also provide an explicit solution of the unique absolutely continuous invariant ergodic distribution generated by the optimal policy function.

Keywords

Bifurcation AnalysisLabor–Output RatioLyapunov ExponentInvariant Measure
Type
Articles
Information
Macroeconomic Dynamics , Volume 16 , Supplement S1: Nonlinear Dynamics in Equilibrium Models , April 2012 , pp. 70 - 85
Copyright
Copyright © Cambridge University Press 2011

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