RCK Model

Initial Capital per Household

Depreciation

Household's Utility Function

Instantaneous Utility Function

Constant-Relative-Rise-Aversion (CRRA)

Real Interest Rate

Wage per Unit of Effective Labor

Household's Budget Constraint

R_t

Household's Capital Holding at time s

Optimal Consumption Growth

Growth Rate of Consumption per Unit of Effective Labor

Rate of Change of Capital per Unit of Effective Labor

Golden Rule

Assumption That Prevents Lifetime utility from Diverging

Phase Diagram

The Saddle Path

Effects of Government Purchases

Speed of Convergence