I have a very fundamental question. I am currently searching for an economic growth model with non negative investment. Can someone tell me if the Ramsey model is one with non negative investment and if so - why? Thank you very much
No it is not. The benchmark Ramsey model allows for positive and negative investment. Treating the case of non-negative (or "irreversible" investment) is considered an extension.
See Barro & Sala-i-Martin (2004). Economic growth (2nd ed)
- Appendix 2B for a short discussion and
- Section 5.1.2 pp 242-247 for an Endogenous growth model with irreversible investment and Human capital.
For a more deep treatment, see
Arrow and Kurz(1970). Optimal Growth with Irreversible Investment in a Ramsey Model, Econometrica, Vol. 38(2), 331-344 .
Well, if you are talking about this
It is definitely a growth model (assuming consumption is less than output).