Skip to main content

Dynamic Ramsey Model

Mitch Phillipson August 22, 2025

blog

I’ve spent the past week focusing on converting a dynamic Ramsey NLP problem into a format suitable for computation using MPSGE. This is the model I presented during the MPSGE Monthly meeting.

Instead of a longer blog post delving into the details, I would like to share the recording of the meeting and point out one piece of errata.

During the meeting I said that

AT=ITIT−1−YTYT−1,AT = \frac{I_T}{I_{T-1}} - \frac{Y_T}{Y_{T-1}},

which isn’t true. What is true is that ATAT is complementary to

ITIT−1−YTYT−1=0.\frac{I_T}{I_{T-1}} - \frac{Y_T}{Y_{T-1}} = 0.

So what we are really saying is that the investment growth rate equals the output growth rate.

I plan to delve more into dynamics in the coming weeks.