Questions tagged [balanced-growth]

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The maximum sustainable yield model: clarifications

I would like your help to understand the Maximum sustainable yield model. This is what I understood with some questions. We consider a population of individuals who are born, possibly reproduce ...
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45 views

Euler equation of consumption in RCK model

(...) usually called the Euler equation for consumption (in effective units of labor) or the Keynes-Ramsey Rule (after those first deriving it): $$ \frac{\dot{c}(t)}{c(t)} = \frac{r(t) - \rho -\...
2
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1answer
60 views

Why are we using exp(.) as the functional form in the household maximization problem inside the RCK model?

Currently I'm studying the RCK model at my Advanced Macroeconomics I classes. A question arose almost immediately when I saw the utility function of a household in this model. The question is: why ...
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1answer
121 views

Why does capital initially reduce and then rise with an anticipated future decrease in taxes in the RCK model?

Consider the version of the RCK model where there is a government that runs a constant balanced budget. At $t_0$, the economy is in steady state, with constant tax $T_{old} > 0$ Then, at $...
2
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1answer
78 views

Can saddle path not go through the origin in Ramsey model?

In my case, the utility function is CEIS and discrete, the production fuction is $f(k_{t})=k_{t}^\alpha$, the budget constraint is $f(k_{t})+(1-\delta)k_{t}=c_{t} + k_{t+1}$. I use Jacobian matrix and ...
2
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1answer
51 views

Comparative Statics on Balanced Growth Path

It would be a silly question. In a model, I have found the BGP (balanced growth path) for all key variables. As expected, these variables are constant variables ; $$\mu^{BGP}=\frac{\alpha+\rho+\pi}{...
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0answers
373 views

How to Show That, on a Balanced Growth Path, Two Variables Grow at the Same Rate

If we are given that a variable is on a balanced growth path (for sake of argument we shall assume consumption), how do we show that another variable related to consumption (like capital or wealth) ...
3
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1answer
438 views

Calculating Time to Balanced Growth Path

$\textbf{Model:}$ $$\underset{\{c_t,k_t\}}{max}\;\sum_{t=0}^\infty\beta^t\frac{c_t^{1-\gamma}}{1-\gamma}$$ $$s.t.\;c_t=Rk_{t-1}-k_t$$ $$c_t,k_t\geq0$$ At time $t$, $c_t$ is consumption and $k_{t-1}$ ...
4
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1answer
336 views

Balanced Growth Path (Qualifier Question)

$\textbf{Full disclaimer:}$ I am studying for my candidacy exams and this question is from one of the exams last year. $$max\;\sum_{t=0}^\infty \beta^t \frac{c_t^{1-\gamma}}{1-\gamma}$$Subject to ...