An Exercise on Discrete-Time Intertemporal Optimization
This paper, using the different alternative methods of dynamic optimization - the Lagrange/Kuhn-Tucker (LKT) method, the substitution method, the Hamiltonian method, and the dynamic programming approach - derives the conditions that must be satisfied by the solution to the so-called Ramsey problem, hopefully in a way that can be understood by advanced undergraduate economics students. This is done by assuming that time is discrete and that, for simplicity but without loss of generality, there are only three periods.
|Date of creation:||Jul 2013|
|Date of revision:|
|Publication status:||Published as UPSE Discussion Paper No. 2013-06, July 2013|
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Web page: http://www.econ.upd.edu.ph/
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