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Saving Rates, Trade, Technology, and Stochastic Dynamics

Author

Listed:
  • Bjarne S. Jensen
  • Martin Richter
  • Chunyan Wang
  • Preben K. Alsholm

Abstract

This paper develops a framework for analyzing the stochastic dynamics of small growing trading economies with CES sector technologies. The open neoclassical two‐sector growth model with a diffusion process (uncertainty) for the aggregate saving/investment ratio is demonstrated with sample paths and long‐run probability distributions of the overall factor endowment ratio. Stochastic endogenous growth and cycles require a combination of fundamental growth parameter values: saving rates, terms of trade, and sectorial substitution elasticities.

Suggested Citation

  • Bjarne S. Jensen & Martin Richter & Chunyan Wang & Preben K. Alsholm, 2001. "Saving Rates, Trade, Technology, and Stochastic Dynamics," Review of Development Economics, Wiley Blackwell, vol. 5(2), pages 182-204, June.
    • Handle: RePEc:bla:rdevec:v:5:y:2001:i:2:p:182-204
    DOI: 10.1111/1467-9361.00117
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    Cited by:

    1. Wei-Bin Zhang, 2015. "A Portfolio Equilibrium Model of Gold and Capital in an Integrated Walrasian General Equilibrium and Neoclassical Growth Theory," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(12), pages 616-627, December.
    2. W. Sanderson & A. Tarasyev & A. Usova, 2015. "Optimal Two Sector Growth Models with Three Factors," Review of Development Economics, Wiley Blackwell, vol. 19(1), pages 85-99, February.
    3. Bjarne S. Jensen, 2004. "Pareto Efficiency, Relative Prices, and Solutions to CGE Models," DEGIT Conference Papers c009_006, DEGIT, Dynamics, Economic Growth, and International Trade.
    4. Robert Feicht & Wolfgang Stummer, 2010. "Complete Closed-form Solution to a Stochastic Growth Model and Corresponding Speed of Economic Recovery preliminary," DEGIT Conference Papers c015_041, DEGIT, Dynamics, Economic Growth, and International Trade.
    5. Bjarne S. Jensen & Mogens E. Larsen, 2005. "General Equilibrium Dynamics of Multi-Sector Growth Models," DEGIT Conference Papers c010_003, DEGIT, Dynamics, Economic Growth, and International Trade.
    6. Zhang Wei-Bin, 2014. "Land Value and Rent Dynamics in an Integrated Walrasian General Equilibrium and Neoclassical Growth Theory," Scientific Annals of Economics and Business, Sciendo, vol. 61(2), pages 235-258, December.
    7. Bjarne S. Jensen, 2011. "Comparative Costs, the Invisible Hand, and Factor Endowments: Ricardo, Ohlin, and Samuelson," DEGIT Conference Papers c016_042, DEGIT, Dynamics, Economic Growth, and International Trade.

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