Ergodic chaos in optimal growth models with low discount rates (Q1341523): Difference between revisions

Until recently the possibility of chaotic optimal dynamics has been established only for the case in which future utilities are discounted extremely heavily. In the paper it is shown that for every discount factor \(\rho\in (0, 1)\) one can find infinitely many strictly concave discrete-time optimal growth models in reduced form which have optimal policy functions exhibiting ergodic chaos. There is no contradiction with the turnpike theorems since the turnpike theorems consider the optimal growth model to be fixed, while in the paper a whole family of optimal growth models is considered.