Abstract
Many economic models are now explicitly dynamic and stochastic. Their state variables evolve in line with the decisions and actions of individual economic agents. These decisions are identified in turn by imposing rationality. Depending on technology, market structure, time discount rates and other primitives, rational behavior may lead either to stability or to instability.
Journal of Economic Theory 122, 100–118, 2005
The authors thank Takashi Kamihigashi, Yasusada Murata and Kevin Reffett for helpful comments. Financial support provided by a Grant-in-Aid for the 21st Century C.O.E. program in Japan is gratefully acknowledged.
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Nishimura, K., Stachurski, J. (2012). Stability of Stochastic Optimal Growth Models: A New Approach. In: Stachurski, J., Venditti, A., Yano, M. (eds) Nonlinear Dynamics in Equilibrium Models. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-22397-6_12
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