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Federal Reserve Bank of Minneapolis
Working Papers
Temporal aggregation in a multi-sector economy with endogenous growth
Jean Mercenier
Philippe Michel

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.

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Jean Mercenier & Philippe Michel, Temporal aggregation in a multi-sector economy with endogenous growth, Federal Reserve Bank of Minneapolis, Working Papers 554, 1995.
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Keywords: Economic development
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