Stochastic technical change, non-renewable resource and optimal sustainable growth

@inproceedings{Lafforgue2008StochasticTC,
  title={Stochastic technical change, non-renewable resource and optimal sustainable growth},
  author={Gilles Lafforgue},
  year={2008}
}
We develop a stochastic endogenous growth model involving a non-renewable resource, in which innovation arrivals are governed by a non-stationary Poisson process. Using a CRRA analytical example, we characterize the optimal trajectories of the model and analyze the effects of uncertainty in the sense of Rothschild and Stiglitz by computing a mean-preserving spread. We show that increased variability in the innovation process always implies a smaller optimal R&D effort, since this leads to a… CONTINUE READING

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