This paper considers the resource constraint commonly used in stochastic one-sector growth models. Shocks are not required to be i.i.d. It is shown that any feasible path converges to zero exponentially fast almost surely under a certain condition. In the case of multiplicative shocks, the...

This paper shows that the standard transversality condition (STVC) is necessary for optimality for stochastic models with bounded or constant-relative-risk-aversion (CRRA) utility under fairly general conditions. We consider an infinite-horizon stochastic maximization problem that takes a...

This paper analyzes the nature of economic dynamics in a one-sector optimal growth model in which the technology is generally nonconvex, nondifferentiable, and discontinuous. The model also allows for irreversible investment and unbounded growth. We provide sufficient conditions for boundedness,...

This paper shows that the standard transversality condition (STVC) is nec-essary for optimality in stochastic models with bounded or constant-relative-risk- aversion (CRRA) utility under fairly general conditions. We consider an infinite-horizon stochastic maximization problem that takes a...

This paper establishes (i) an extension of Michel's (1990, Theorem 1) necessity result to an abstract reduced-form model, (ii) a generalization of the results of Weitzman (1973) and Ekeland and Scheinkman (1986), and (iii) a new result that is useful particularly in the case of homogeneous...

We study a simple infinite horizon model with indivisible labor. We characterize the optimal plans under the assumptions that $\beta R = 1$ and that $1/2 \leq \beta 1$, where R is the gross interest rate and $\beta$ is the discount factor. We show that under those assumptions, optimal plans are...

This paper studies conditions under which the price of an asset is uniquely determined by its fundamental value - i.e., no bubbles can arise - in Lucas-type asset pricing models with unbounded utility. After discussing Gilles and LeRoy's (1992) example, we construct an example of a two-period,...

Ekeland and Scheinkman (1986) prove the necessity of a standard transversality condition under certain technical conditions. Their result is one of the most powerful on the necessity of a transversality condition currently available in the literature, and their proof involves numerous...

This note provides a simple proof of the necessity of the transversality condition for the differentiable reduced-form model. The proof uses only an elementary perturbation argument without relying on dynamic programming. The proof makes it clear that, contrary to common belief, the necessity of...