Abstract:

In this paper it is suggested a new approach to the Ramsey model with the Constant Relative Risk Aversion (CRRA) utility function  and Cobb-Douglas technology. The suggested approach allows finding a steady state which is new and unknown before. It is proved that the found steady state is stable. With help of the method of a small parameter analytical solution of the model has been obtained. Some opportunities for improving the obtained analytical solution are suggested. It is shown that transversality condition, which is a component part of the Rumsey model, holds true for the new approach.