as a beginner in macro, I'm trying to understand the Brock-Mirman model for one of my assignments and I am told (in the assignment) that there is a $k^*$ such that k is bounded.

From the production function I see that $\ k_{t+1} = k_t^\alpha $ will go to a $k^*$ as $t\to\infty$, and we already know that marginal product of capital will go to zero. But what is the intuition behind this? How does $ k^* = k^*{^\alpha} $ work as a bound?


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.