Optimal balanced growth in a general multi-sector endogenous growth model with constant returns (Q943349): Difference between revisions

The paper is devoted to the study of a discrete-time optimal multi-sector growth model in which there is used constant-returns-to-scale technology, expressed in per capita terms -- such a technology makes it possible that the economy expands unboundedly. The author proves the existence and uniqueness of an optimal balanced growth path and also analyzes local stability of so-called von Neumann facet, which is shown to be an \(n\)-dimensional linear manifold. It is proven that optimal processes not leaving the von Neumann facet are explosive and that the optimal balanced growth equilibrium path is stable in the saddle-point sense. The proof of existence of optimal balanced paths is interesting: it is based on the continuity of the Frobenius root of indecomposable nonnegative matrices, Weierstrass' theorem and a representation of effective techniques of production (non-substitution theorem). The results are an extension of the existing ones for two-sector models to the multi-sector context [\textit{E. W. Bond, P. Wang} and \textit{C. K. Yip}, J. Econ. Theory 68, No. 1, 149--173 (1996; Zbl 0849.90024)].