Neoclassical stochastic economic growth model: An application to the Bolivian economy

Abstract

The following project is to consider a neoclassical model. To see the grow in one-sector a continuous-time of Ramsey-type with an utility and production function. Where each component are exposed in exogenous shocks. The corresponding dynamics are represented by stochastic differential equations. Equations are solved explicitly maximizing the average, the utility level that it has by consumption. In particular, Bolivia‟s economy, the period of analysis and the equations that describe the behaviour or long-term trajectory of real PIB, Gross Fixed Capital Formation. The total population is considered as a labor force and the optimal consumption. As a result, we presented the equations that were found through simulations to use mathematical software Mat Lab, making some replicas observed in panel data in Bolivian´s economy. Which represents fluctuations and long-term growth of the economy? To investigate the fluctuations and the economic growing in Bolivia, with the model neoclassic in a large period.