Efficiency in economic growth models under uncertainty

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We consider an infinite-horizon economy with stochastic production and consumption. We define efficiency of feasible production-consumption programs without referring to a particular utility function, using stochastic ordering. A complete characterization of inefficiency (of type I) is obtained. Equivalence between (type II) efficiency and a certain optimality notion when decision-makers are risk-averse is proved when the number of states of nature is finite at each date.

Original languageEnglish
Pages (from-to)27-38
Number of pages12
JournalJournal of Economic Dynamics and Control
Issue number1
StatePublished - Jan 1992


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