Optimal investment allocation in decentralized markets
This paper makes three contributions to the Feldman-Mahalanobis (F-M) model. First, it overcomes the limitation of the original model, which assumes a passive role of consumption demand, by extending the F-M model through the introduction of intertemporal maximization of consumption. Second, it sh...
| Main Authors: | , |
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| Format: | Article |
| Language: | Portuguese |
| Published: |
Universidade Presbiteriana Mackenzie
2015-12-01
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| Series: | Revista de Economia Mackenzie |
| Subjects: | |
| Online Access: | http://editorarevistas.mackenzie.br/index.php/rem/article/view/7792 |
| Summary: | This paper makes three contributions to the Feldman-Mahalanobis (F-M) model. First, it overcomes the limitation of the original model, which assumes a
passive role of consumption demand, by extending the F-M model through the
introduction of intertemporal maximization of consumption. Second, it shows
that decentralized markets can mimic the dynamic behavior of the centrally planned economy with two sectors, consumption and investment goods. This is accomplished by using Cobb-Douglas production functions in both sectors. Third,
in contrast with the F-M model in which the solutions are unstable, this paper
proves the stability of the steady state solutions |
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| ISSN: | 1678-5002 1808-2785 |