A Complete Characterization of Optimal Growth Paths in an Aggregated Model with a Non-Concave Production Function

Abstract

The convexity of technology has played a crucial role in economic analyses of optimal one-sector growth problems. For example, two of the key results on the traditional model of Ramsey (1928) that have relied on the convexity of the technology are that optimal intertemporal growth involves moving monotonically towards a unique steady state (as in Cass 1965; Koopmans 1965), and that the value function is a concave differentiable function of the initial capital stock (as in Benveniste and Scheinkman 1979).