Comment on `Amitava Bose: A Discussion on Continuous Time Growth Models'

Chetan Ghate

Abstract


This comment on Bose's note suggests that a possible approach could be to retain the continuous time framework and think about the tension between the Inada condition and the essentiality of capital. Whether there is take-off or no accumulation (forever) depends on what "force" gets the upper hand at k=0.On the one hand, no capital can be accumulated since capital is essential. On the other hand, at k=0, the marginal product of capital is infinity. Therefore, even a zero amount of capital can lead to positive output and to accumulation. Which of these forces dominates is unpredictable. Either the essentiality of capital dominates. This produces the trivial solution (k=0). Or the Inada condition dominates and this triggers an instantaneous take off.

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