A simple characterisation for sustained growth (Q2222220)

This article considers the problem about conditions ensuring sustained growth, in the generalised case, i.e. where the dynamics of the economy can be characterised as a solution of \[ \max \left [\sum_{s=0}^{\infty}\delta^sV(x_s,x_{s+1})\right ], \] where \(\delta \in (0, 1)\) is the discount factor and \(V\) denotes the payoffs function. Under mild conditions, the following condition is sufficient for characterising sustained growth: \[ V_2(x, x) + \delta V_1(x, x) > 0, \] for every \(x\) large enough. The notations \(V_1(x, y)\) and \(V_2(x, y)\) denote respectively the partial derivatives corresponding to the first and the second arguments. The threshold beyond which the economy converges to infinity is characterised. The conditions, are simple and easy to verify.