On Dictatorship, Economic Development and Stability

Figure 2: Dynamics of τ and k when σ < 1

The sign of this derivative depends on σ. If σ < 1, then the derivative is negative. It is
positive otherwise.

Hence, the function (24) is increasing in k_t and the function (25) is decreasing in k_t
if σ < 1 and increasing if σ > 1. Knowing these two functions, we can proceed to a
graphical exposition with a few examples. These examples will illustrate the dynamics of
the economy depending on different types of dictatorships.

3.3.1 Dynamics when σ < 1

If σ < 1, then the function (24) is increasing and the function (25) is decreasing. They
intersect only once at the interior steady state. This steady state is a saddle point.

24

<<   23   24   25   26   27   28   29   >>

More intriguing information