RESEARCH PAPER NO. 777
STOCHASTIC OPTIMAL GROWTH WITH UNBOUNDED SHOCK
by
JOHN STACHURSKI
FEBRUARY 2001
Department of Economics. University of Melbourne. Melbourne Victoria 3010 Australia
ABSTRACT
This paper considers a neoclassical optimal growth problem where the shock that perturbs the economy in each time period is potentially unbounded on the state space. Sufficient conditions for existence, uniqueness and stability of equilibria are derived in terms of the primitives of the model using new techniques from the field of perturbed dynamical systems.
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