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Stochastic optimal growth with risky labor supply

Cai, Yiyong; Kamihigashi, Takashi; Stachurski, John

Description

Production takes time, and labor supply and profit maximization decisions that relate to current production are typically made before all shocks affecting that production have been realized. In this paper we re-examine the problem of stochastic optimal growth with aggregate risk where the timing of the model conforms to this information structure. We provide a set of conditions under which the economy has a unique, nontrivial and stable stationary distribution. In addition, we verify key...[Show more]

CollectionsANU Research Publications
Date published: 2014
Type: Journal article
URI: http://hdl.handle.net/1885/69085
Source: Journal of Mathematical Economics
DOI: 10.1016/j.jmateco.2013.08.002

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