Inefficiency and the Golden Rule: Phelps-Koopmans Revisited
نویسندگان
چکیده
We study the celebrated Phelps-Koopmans theorem in environments with nonconvex production technologies. We argue that a robust failure of the theorem occurs in such environments. Specifically, we prove that the Phelps-Koopmans theorem must fail whenever the net output of the aggregate production function f (x), given by f (x) − x, is increasing in any region between the golden rule and the maximum sustainable capital stock. Journal of Economic Literature Classification Numbers: C61, O41.
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