Summary
Most of the literature on global stability of optimal public capital often treats private and public capital as physically identical goods. As a result, one important characterlistic of public capital,”non-rivalness,” will be neglected. This is clearly a serious analytical defect. To tackle the problem, a three-sector optimal growth model, where one of the sectors is a public sector and produces public capital, is set up, and the global stability of the optimal path of public capital will be demonstrated.
This work was supported by a grant from Tokyo Center for Economic Research. I also should like to thank an anonymous referee, Tohru Maruyama and Seminar participants at Keio University for their valuble comments. Of course, any remaining errors are mine.
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Takahashi, H. (2000). A Turnpike Theorem with Public Capital. In: Dockner, E.J., Hartl, R.F., Luptačik, M., Sorger, G. (eds) Optimization, Dynamics, and Economic Analysis. Physica, Heidelberg. https://doi.org/10.1007/978-3-642-57684-3_16
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DOI: https://doi.org/10.1007/978-3-642-57684-3_16
Publisher Name: Physica, Heidelberg
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