Optimal economic growth and uncertainty: The discounted case

摘要: The cornerstone of one-sector optimal economic growth models is the existence and stability a steady-state solution for consumption policies. policy stable branch saddle point system differential equations governing dynamics economy. Examples this type behavior can be found in Cass [2] Koopmans [4]. However, knife-edge sense that any perturbation, no matter how small, results instability eventual annihilation. (This phenomenon true when Euler conditions are adhered to after perturbation). Small pertubations might occur due observation errors or lack knowledge exact production functions. It seems reasonable expect all sorts human influence decision variables. Hence unless perfect variables, present future, were known with complete certainty, decisions made exactness, economies deterministic would lead at best suboptimal investment One analogous if aggregation error, say, not certainty. Moreover, it should expected planners know future something less than Since impossible, face uncertainty