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Temporal Aggregation in a Multi-Sector Economy With Endogenous Growth

Working Paper 554 | Published September 1, 1995

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Authors

Jean Mercenier

Philippe Michel

Temporal Aggregation in a Multi-Sector Economy With Endogenous Growth

Abstract

We provide a theoretical treatment of temporal aggregation in models that exhibit long-term endogenously-generated steady growth; hence generalizing our previous analysis (_Econometrica_ 62, 1994, pp. 635–56). We introduce the _property of steady-growth invariance_—that the long-term growth of the continuous-time economy not be affected by the discretization—which imposes consistency restrictions on the joint formulation of preferences and stock accumulation of the discrete-time approximation. We establish, under mild conditions, these restrictions in the form of necessary and sufficient conditions on the discretization.


Published in _Journal of Economic Dynamics and Control_ (Vol. 25, No. 8, August 2001, pp. 1179-1191), https://doi.org/10.1016/S0165-1889(99)00051-2.