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Allais-anonymity as an alternative to the discounted-sum criterion in the calculus of optimal growth I: Consensual optimality

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  • Mabrouk, Mohamed

Abstract

The objective of this work is to try to define and calculate the optimal growth path, in the presence of exogenous technical change, without resorting to the discounted-sum criterion. The solution suggested is to consider an optimality criterion expressing an Allais-anonymous intergenerational consensus. The partial characterization of consensual optimality was made possible thanks to the decomposition of the dual of the space of sub-geometric sequences of reason p. The main finding is a relation between the marginal rate of substitution between bequest and heritage, and the growth rate, relation which is a necessary condition for consensual optimality. The necessary study of the Pareto-optimality of the consensual optimum is the subject of a forthcoming paper "Allais-anonymity as an alternative to the discounted-sum criterion in the calculus of optimal growth II: Pareto optimality and some economic interpretations".

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10512.

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Date of creation: 07 Apr 2006
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Handle: RePEc:pra:mprapa:10512

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Keywords: Intergenerational anonymity; Intergenerational equity; Optimal growth; Technical change; Time-preference; Discounted-sum criterion; Consensual criterion; OG economy;

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