Stochastic turnpike property and stationary equilibrium (Q1117130): Difference between revisions

I study the stability properties of a stochastic equilibrium growth model with a finite number of infinitely lived consumers. The exogenous stochastic environment is represented by a stationary stochastic process that influences preferences, technology, and primary resources. Consumers maximize the expected sum of discounted utilities. Production is intertemporal and primary resources are assumed to be necessary for the production of capital goods. By adapting standard assumptions in general equilibrium theory and turnpike theory, I show that if consumers have homogeneous discount factors close enough to one, the allocation of an interior equilibrium converges to the allocation of a stationary equilibrium with transfer payments. This result is used to prove the existence of a stationary equilibrium.