Discounting and Long-Run Behavior: Global Bifurcation Analysis of a Family of Dynamical Systems

@article{Mitra2001DiscountingAL,
  title={Discounting and Long-Run Behavior: Global Bifurcation Analysis of a Family of Dynamical Systems},
  author={Tapan Mitra and Kazuo Nishimura},
  journal={J. Economic Theory},
  year={2001},
  volume={96},
  pages={256-293}
}
This paper is concerned with the relationship between the discount rate and the nature of long-run behavior in dynamic optimization models. The theory is developed under two conditions. The first is history independence, which rules out multiple limit sets. The second is a condition that avoids the reversion to a stable steady state, as the discount factor is lowered, once cycles have emerged. These conditions appear to be the minimal restrictions that would allow analysis by a bifurcation… CONTINUE READING
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