Exact parametric restrictions for 3-cycles in the RSS model: A complete and comprehensive characterization

This paper presents necessary and sufficient conditions for 3-period cycles in the two-sector Robinson–Solow–Srinivasan (RSS) model, taking as its point of departure an independently-(and simultaneously-) discovered exact discount-factor restriction for a general class of growth models by Mitra and Nishimura–Yano (MNY) in 1996. Our investigation of this remarkable result in the specificity of the RSS model enables a broadened inquiry that goes beyond the discount factor to parameters of labor-productivity and capital-depreciation. Since the RSS model, despite its concrete simplicity, is not covered by the general MNY model, the exact discount-factor restriction presented here does not follow from the MNY theorem, and necessitates new argumentation. Furthermore, we present a novel exact parametric region as our second result.

Duke Scholars

Author Liuchun Deng DKU Faculty