Balanced growth and degrowth with human capital
Résumé
We address the fundamental issue of the optimality of the Balanced Growth Path (BGP) in a discrete-time version of Lucas (1988). After proving that the value function is supermodular and that any optimal solution is monotone, we prove that the BGP is optimal and that it is the unique optimal solution. Because of human capital depreciation, we also show that the economy can experience optimal endogenous degrowth.
Domaines
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