The Choice of a Growth Path under a Linear Quadratic Approximation
There is a recent strand of literature which suggests that second order approximations of linear quadratic objective functions in the steady state vicinity, namely when assuming stochastic scenarios, lead to very interesting and useful results. For example, applications in monetary policy resort to such technique. In this paper we find that, for a specific optimal control problem under a purely deterministic setup, a second-order approximation of the objective function may lead to inaccurate results, particularly when one considers exogenous variables as arguments of the objective function. These results are related to the stability conditions, which in the present case can be written as constraints to a discount rate associated with future outcomes. We designate the proposed model as an ‘optimal growth control’ model, from which we compute general conditions about stability and analyse the application of such a framework to a fertility–human capital problem.
Volume (Year): (2005)
Issue (Month): 22 (December)
|Contact details of provider:|| Postal: |
Phone: + 351 239 790 500
Fax: + 351 239 40 35 11
Web page: http://notas-economicas.fe.uc.pt/index_en.htm
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:gmf:journl:y:2005:i:22:p:68-81. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sara Santos)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.