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| Author: | Askenazy, P. Le Van, C. |
| Title: | A model of optimal growth strategy |
| Journal: | Journal of Economic Theory
1999 : MAR, VOL. 85:1, p. 24-51 |
| Index terms: | Optimization Growth Strategy Technology Developing countries Models |
| Language: | eng |
| Abstract: | In this paper, an optimal growth model is presented with convex-concave technology for an open developing country. The latter may choose to produce consumption goods by borrowing on capital markets or to import consumption goods by investing its saving on capital markets. It is proven that there exist two non-trivial steady states. An optimal path converges either to 0 or to the high steady state, that depends on the levels of the initial debt and / or of debt constraint. In addition, it is proven in the paper that there exists poverty trap if the time preference is very high. |
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