Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/22709
Authors: 
Schlegel, Christoph
Year of Publication: 
2004
Series/Report no.: 
Dresden discussion paper in economics 05/04
Abstract: 
This paper analyses a RBC model in continuous time featuring deterministic incremental development of technology and stochastic fundamental inventions arriving according to a Poisson process. Other than in standard RBC models, shocks are uncorrelated, irregular and rather seldom. In two special cases analytical solutions are presented. In the general case a delay differential equation (DDE) has to be solved. Standard numerical solution methods fail, because the steady state is path dependent. A new solution based on a modified method of steps for DDEs provides not only approximations but also upper and lower bounds for optimal consumption path and steady state.
Subjects: 
Business cycle models with poisson shocks
RBC models in continuous time
Delay differential equations
JEL: 
E32
O41
C61
C65
C68
Document Type: 
Working Paper

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