The Stochastic Growth Model

This is a review of the theoretical conditions for The Stochastic Growth Model.

1. Introduction

2. The stochastic growth model

4. Linearization around the balanced growth path

5. Solution of the linearized model

6. Impulse response functions

7. Conclusions

Appendix A
A1. The maximization problem of the representative fi rm
A2. The maximization problem of the representative household

Appendix B

Appendix C
C1. The linearized production function
C2. The linearized law of motion of the capital stock
C3. The linearized fi rst-order condotion for the fi rm’s labor demand
C4. The linearized fi rst-order condotion for the fi rm’s capital demand
C5. The linearized Euler equation of the representative household
C6. The linearized equillibrium condition in the goods market

References