Temporal aggregation in a multi-sector economy with endogenous growth
Abstract: We provide a theoretical treatment of temporal aggregation in models that exhibit long-term endogenously-generated steady growth; hence generalizing our previous analysis (Econometrica 62, 1994, pp. 635-56). We introduce the property of steady-growth invariance - that the long-term growth of the continuous-time economy not be affected by the discretization - which imposes consistency restrictions on the joint formulation of preferences and stock accumulation of the discrete-time approximation. We establish, under mild conditions, these restrictions in the form of necessary and sufficient conditions on the discretization.
Keywords: Economic development;
File(s): File format is application/pdf http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=612
Provider: Federal Reserve Bank of Minneapolis
Part of Series: Working Papers
Publication Date: 1995