A Note on the Global Stability of a Simple Growth Model with Many Capital Goods
Date
1968-11
Authors
Burmeister, Edwin
Dobell, Rod
Kuga, Kyoshi
Journal Title
Journal ISSN
Volume Title
Publisher
M.I.T. Press
Abstract
This article analyzes the global stability growth model which has more than one capital good. Growth models with many assets represent an obvious advance beyond the simple one-sector model involving only a single real capital good, and permit discussion of portfolio choice, capital market trading conditions and other important features of a general equilibrium system. One of the particularly interesting features of such models is the emergence of certain dynamic efficiency conditions, or capital market equilibrium conditions, when auxiliary variables interpreted as shadow prices of assets are introduced. These efficiency conditions, however, involve capital gains terms in a crucial way and the behavior of asset prices may often be such that undue attention to expectations of capital gains can create unstable development.
Description
(c) 1968 by M.I.T. Press: http://www.mitpressjournals.org/loi/qjec
Keywords
asset pricing, dual stability, optimization, complex systems, global stability, economic growth models
Citation
Burmeister, Edwin, Rodney Dobell, and Kiyoshi Kuga. "A Note on the Global Stability of a Simple Growth Model with Many Capital Goods." The Quarterly Journal of Economics 82.4 (1968): pp. 657-665.