Basic Stochastic Dynamic Systems of Growth and Trade.
Uncertainties are intrinsic features of dynamic economic systems, and this paper considers the dynamic implications of factor endowment (labor, capital) uncertainties for a small growing trading economy. The stochastic growth models presented extend the open neoclassical two-sector growth model (Deardorff) to a stochastic environment in continuous time, and extend the diffusion dynamics of one-sector growth models (Merton; Bourguignon) to a trading two-sector economy. It is demonstrated that the basic propositions of deterministic steady-state growth and endogenous growth theory, under some specifications and certain parametric restrictions, are preserved within a stochastic framework. Copyright 1999 by Blackwell Publishing Ltd.
Year of publication: |
1999
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Authors: | Jensen, Bjarne S ; Wang, Chunyan |
Published in: |
Review of International Economics. - Wiley Blackwell, ISSN 0965-7576. - Vol. 7.1999, 3, p. 378-402
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Publisher: |
Wiley Blackwell |
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