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Optimal Economic Growth Models with Nonlinear Utility Functions

Author

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  • Vu Thi Huong

    (Vietnam Academy of Science and Technology)

  • Jen-Chih Yao

    (China Medical University)

  • Nguyen Dong Yen

    (Vietnam Academy of Science and Technology)

Abstract

We study a class of finite horizon optimal economic growth problems with nonlinear utility functions and linear production functions. By using a maximum principle in the optimal control theory and employing the special structure of the problems, we are able to explicitly describe the unique solution via input parameters. Economic interpretations of the obtained results and an open problem about the case where the total factor productivity falls into a bounded open interval defined by the growth rate of labor force, the real interest rate, and the exponent of the utility function are also expressed.

Suggested Citation

  • Vu Thi Huong & Jen-Chih Yao & Nguyen Dong Yen, 2021. "Optimal Economic Growth Models with Nonlinear Utility Functions," Journal of Optimization Theory and Applications, Springer, vol. 188(2), pages 571-596, February.
    • Handle: RePEc:spr:joptap:v:188:y:2021:i:2:d:10.1007_s10957-020-01797-5
    DOI: 10.1007/s10957-020-01797-5
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    References listed on IDEAS

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    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    3. Fernando A. C. C. Fontes & Hélène Frankowska, 2015. "Normality and Nondegeneracy for Optimal Control Problems with State Constraints," Journal of Optimization Theory and Applications, Springer, vol. 166(1), pages 115-136, July.
    4. David Cass, 1965. "Optimum Growth in an Aggregative Model of Capital Accumulation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 32(3), pages 233-240.
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