Limit of the Solutions for the Finite Horizon Problems as the Optimal Solution to the Infinite Horizon Optimization Problems
We aim to generalize the results of Cai and Nitta (2007) by allowing both the utility and production function to depend on time. We also consider an additional intertemporal optimality criterion. We clarify the conditions under which the limit of the solutions for the finite horizon problems is optimal among all attainable paths for the infinite horizon problems under the overtaking criterion, as well as the conditions under which such a limit is the unique optimum under the sum-of-utilities criterion. The results are applied to a parametric example of the one-sector growth model to examine the impacts of discounting on optimal paths.
|Date of creation:||Mar 2008|
|Publication status:||Published in Journal of Difference Equations and Applications Volume 17, Issue 3, 2011, Pages 359 - 373|
|Contact details of provider:|| Web page: http://arxiv.org/|
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- Cuong Le Van & Lisa Morhaim, 2006.
"On optimal growth models when the discount factor is near 1 or equal to 1,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
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