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

  • 2
    $\begingroup$ what exactly do you mean by non-negative investment? In most growth models there will be some positive level of investment. $\endgroup$
    – 1muflon1
    Oct 19 '20 at 18:54

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).


Your Answer

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

Not the answer you're looking for? Browse other questions tagged or ask your own question.