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Optimal Dynamics of Innovation in Models of Economic Growth

Author

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  • A. M. Tarasyev

    (International Institute for Applied Systems Analysis
    Institute of Mathematics and Mechanics)

  • C. Watanabe

    (Tokyo Institute of Technology)

Abstract

A nonlinear model of economic growth which involves production, technology stock, and their rates as the main variables is considered. Two trends (growth and decline) in the interaction between the production and R&D investment are examined in the balanced dynamics. The optimal control problem of R&D investment is studied for the balanced dynamics and the utility function with the discounted consumption. The Pontryagin optimality principle is applied for designing the optimal nonlinear dynamics. An existence and uniqueness result is proved for an equilibrium of the saddle type and the convergence property of the optimal trajectories is shown. Quasioptimal feedbacks of the rational type for balancing the dynamical system are proposed. The growth properties of the production rate, R&D, and technology intensities are examined on the generated trajectories.

Suggested Citation

  • A. M. Tarasyev & C. Watanabe, 2001. "Optimal Dynamics of Innovation in Models of Economic Growth," Journal of Optimization Theory and Applications, Springer, vol. 108(1), pages 175-203, January.
    • Handle: RePEc:spr:joptap:v:108:y:2001:i:1:d:10.1023_a:1026422223814
    DOI: 10.1023/A:1026422223814
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    References listed on IDEAS

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    1. Watanabe, Chihiro, 1992. "Trends in the substitution of production factors to technology--empirical analysis of the inducing impact of the energy crisis on Japanese industrial," Research Policy, Elsevier, vol. 21(6), pages 481-505, December.
    2. V.F. Borisov & G. Hutschenreiter & A.V. Kryazhimskii, 1999. "Asymptotic growth ratesin knowledge‐exchanging economies," Annals of Operations Research, Springer, vol. 89(0), pages 61-73, January.
    3. C.S. Lee & G. Leitmann, 1999. "On one aspect of science policy based onan uncertain model," Annals of Operations Research, Springer, vol. 88(0), pages 199-214, January.
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    Cited by:

    1. B. K. Ane & A. M. Tarasyev & C. Watanabe, 2007. "Impact of Technology Assimilation on Investment Policy: Dynamic Optimization and Econometric Identification," Journal of Optimization Theory and Applications, Springer, vol. 134(2), pages 321-338, August.
    2. B. K. Ane & A. M. Tarasyev & C. Watanabe, 2007. "Construction of Nonlinear Stabilizer for Trajectories of Economic Growth," Journal of Optimization Theory and Applications, Springer, vol. 134(2), pages 303-320, August.

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