Optimal Accumulation in a Small Open Economy with Technological Uncertainty
ASU Working Paper 97/9
19 Pages Posted: 2 Mar 1998
There are 2 versions of this paper
Optimal Accumulation in a Small Open Economy with Technological Uncertainty
Date Written: August 1997
Abstract
This paper analyzes the optimal allocation problem of a small country facing an uncertain technology and trading. It is involved in production of many commodities. Differentiability cannot be guaranteed, hence, the Ramsey-Euler condition of optimality needs to be modified. From the optimality criterion, we derive a pair of conditions, which does not require differentiability. If "enough" uncertainty is allowed, the sequence of the distribution functions of investment expenditure converges uniformly to a unique invariant measure.
JEL Classification: C61, D90, O41
Suggested Citation: Suggested Citation
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