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The dynamics of the Stiglitz policy in the RSS model

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  • Metcalf, Christopher J.

Abstract

We examine a policy proposed by Stiglitz in the context of a multi-sector model proposed by Robinson, Solow, and Srinivasan (henceforth the RSS model) and recently reconsidered by Khan and Mitra. We characterize the policy by drawing on and extending dynamical systems theory in order to divide the parameter space into regions of a unique attracting cycle of each period and a region of no attracting cycles. This characterization allows us to establish the result that the policy is “bad” for almost all initial stocks for a range of parameter values, when we shift from a continuous-time to a discrete-time setting.

Suggested Citation

  • Metcalf, Christopher J., 2008. "The dynamics of the Stiglitz policy in the RSS model," Chaos, Solitons & Fractals, Elsevier, vol. 37(3), pages 652-661.
    • Handle: RePEc:eee:chsofr:v:37:y:2008:i:3:p:652-661
    DOI: 10.1016/j.chaos.2006.09.046
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    References listed on IDEAS

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    1. David Gale, 1967. "On Optimal Development in a Multi-Sector Economy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(1), pages 1-18.
    2. Robert M. Solow, 1962. "Substitution and Fixed Proportions in the Theory of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 29(3), pages 207-218.
    3. Day, Richard H. & Shafer, Wayne, 1987. "Ergodic fluctuations in deterministic economic models," Journal of Economic Behavior & Organization, Elsevier, vol. 8(3), pages 339-361, September.
    4. M. Ali Khan & Tapan Mitra, 2005. "On choice of technique in the Robinson–Solow–Srinivasan model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(2), pages 83-110, June.
    5. Alexander J. Zaslavski, 2005. "Optimal programs in the Robinson, Solow and Srinivasan model," International Journal of Economic Theory, The International Society for Economic Theory, vol. 1(2), pages 151-165, June.
    6. Stiglitz, Joseph E, 1970. "Reply to Mrs. Robinson on the Choice of Technique," Economic Journal, Royal Economic Society, vol. 80(318), pages 420-422, June.
    7. Mitra, Tapan, 2001. "A Sufficient Condition for Topological Chaos with an Application to a Model of Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 133-152, January.
    8. Nishimura, Kazuo & Yano, Makoto, 1994. "Optimal Chaos, Nonlinearity and Feasibility Conditions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(5), pages 689-704, August.
    9. Mitra, Tapan & Nishimura, Kazuo, 2001. "Introduction to Intertemporal Equilibrium Theory: Indeterminacy, Bifurcations, and Stability," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 1-12, January.
    10. Robinson, Joan, 1969. "A Model for Accumulation Proposed by J. E. Stiglitz," Economic Journal, Royal Economic Society, vol. 79(314), pages 412-413, June.
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    Cited by:

    1. Ali Khan, M. & Piazza, Adriana, 2011. "Optimal cyclicity and chaos in the 2-sector RSS model: An anything-goes construction," Journal of Economic Behavior & Organization, Elsevier, vol. 80(3), pages 397-417.
    2. Khan, M. Ali & Piazza, Adriana, 2010. "On the non-existence of optimal programs in the Robinson-Solow-Srinivasan (RSS) model," Economics Letters, Elsevier, vol. 109(2), pages 94-98, November.

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