This video plots the evolution of the log wealth density in three economies:
  1. a deterministic economy with geometric growth rate μl (in blue)
  2. a deterministic economy with geometric growth rate switching permanently from μl to μh (in red)
  3. a stochastic economy with geometric growth rate fluctuating between μl and μh every two years (in green)
The graph uses μl = - 2%, μh = - 0.5%, and an idiosyncratic volatility ν = 1%