Random Fixed Points in a Stochastic Solow Growth Model

Abstract:     
This paper presents a complete analysis of a stochastic version of the Solow growth model in which all parameters are ergodic random variables. Applying random dynamical systems theory, we prove that the dynamics and, in particular, the long-run behavior is uniquely determined by a globally attracting stable random fixed point. We also discuss the relation of our approach to that of ergodic Markov equilibria.

Number of Pages in PDF File: 15

Keywords: Solow Growth Model; Random Dynamical Systems; Random Fixed Points; Ergodic Markov Equilibria

JEL Classification: C62, E13, O41

working papers series