A Twisted Turnpike.
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In a closed linear model of production, a path of maximal balanced growth is called a Neumann ray; long, efficient paths of capital accumulation remain near a Neumann ray most of the time. This paper uses McKenzie's version of the Morishima nojoint-production turnpike theorem to determine how much of the theory can be retained if the production possibilities vary with time. If the set of production possibilities for each good is assumed to be compact and strictly convex, instead of finite, the theorem is strengthened. It is found that, if the transformation sets are weakly positive, the diameter of the set of prices associated with efficient paths approaches zero. If the isoquants are uniformly strictly convex, long, efficient paths are close to each other most of the time. With earlier turnpike models, convergence of efficient paths meant convergence to the turnpike. With the more general assumptions, this remains true, but the turnpike is difficult to compute. 16 pp. Ref.
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