publication . Preprint . 2015

Stochastic Stability of Endogenous Growth: Theory and Applications

Boucekkine, Raouf; Pintus, Patrick; Zou, Benteng;
Open Access English
  • Published: 01 Jul 2015
  • Publisher: HAL CCSD
Abstract
We examine the issue of stability of stochastic endogenous growth. First, stochastic stability concepts are introduced and applied to stochastic linear homogenous differen- tial equations to which several stochastic endogenous growth models reduce. Second, we apply the mathematical theory to two models, starting with the stochastic AK model. It’s shown that in this case exponential balanced paths, which characterize optimal trajectories in the absence of uncertainty, are not robust to uncertainty: the economy may almost surely collapse at exponential speed even though productivity is initially arbitrarily high. Finally, we revisit the seminal global diversificat...
Subjects
free text keywords: stochastic stability, [SHS.ECO]Humanities and Social Sciences/Economics and Finance, global diversification, stochastic growth, AK model, endogenous growth, Endogenous growth, stochastic growth, stochastic stability, AK model, Global diversification, endogenous growth,stochastic growth,stochastic stability,AK model,global diversification, jel:O40, jel:C62, jel:C61
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publication . Preprint . 2015

Stochastic Stability of Endogenous Growth: Theory and Applications

Boucekkine, Raouf; Pintus, Patrick; Zou, Benteng;