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A NOTE ON THE ANALYTICAL SOLUTION TO THE NEOCLASSICAL GROWTH MODEL WITH LEISURE

Published online by Cambridge University Press:  13 June 2012

Ryoji Hiraguchi
Ryoji Hiraguchi*
Affiliation:
Ritsumeikan University
*
Address correspondence to: Ryoji Hiraguchi, Faculty of Economics, Ritsumeikan University. 1-1-1, Noji-higashi, Kusatsu, Shiga, Japan; e-mail: rhira@fc.ritsumei.ac.jp.
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Abstract

In this note, we study the basic Ramsey models with labor–leisure choice. We first study the deterministic model and find that a closed-form solution exists and is represented by the Gauss hypergeometric functions. We next incorporate stochastic productivity shocks into the model. We prove that the analytical solution path still exists if the coefficient of relative risk aversion is equal to the capital share.

Keywords

Optimal GrowthClosed-Form SolutionRamsey Model
Type
Notes
Information
Macroeconomic Dynamics , Volume 18 , Issue 2 , March 2014 , pp. 473 - 479
Copyright
Copyright © Cambridge University Press 2012 

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