Working Paper BETA #2015-18

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Title : A ’Jump’ in the Stochasticity of the Solow-Swan Growth Model.

Author(s) : Claude Diebolt, Tapas Mishra, Mamata Parhi

Abstract : We characterize ’Solow-Swan’ economic growth model in a stochastic environment. Our interest basically lies in modelling arrival of uncommon or stochastic shocks in both physical capital and labour, introducing discontinuities in the growth of these variables. These characterizations are completed by employing a Jump process to the Solow-Swan model. Interesting dynamics of capital and labor growth emerge from our investigation.

Key-words : Stochastic Solow-Swan growth, Brownian motion, Jump process.

JEL Classification : E13, C60, O41, L1, C1, D2.