Atolia, Manoj; Chatterjee, Santanu; Turnovsky, Stephen J. - In: Journal of Economic Dynamics and Control 34 (2010) 9, pp. 1550-1571
This paper investigates the reliability of employing linearization to evaluate the dynamic adjustments to changes in productive government spending in a Ramsey growth model. If government expenditure is introduced as a flow and the dynamic adjustment is fast, linearization may yield a reasonably...