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The Genuine Saving Criterion and the Value of Population in an Economy with Endogenous Population Changes

Author

Listed:
  • Arrow, Kenneth J.
  • Bensoussan, Alain
  • Feng, Qi
  • Sethi, Suresh P.

Abstract

We study an economy in which the rate of change of population depends on population policy decisions. This requires population as well as capital as state variables. By showing the algebraic relationship between the shadow price of the population and the shadow price of the per capita capital stock, we are still able to depict the optimal path and its convergence to the long-run equilibrium on a two-dimensional phase diagram. Moreover, we derive explicitly the expression of genuine savings in our model to evaluate the sustainability of the system.

Suggested Citation

  • Arrow, Kenneth J. & Bensoussan, Alain & Feng, Qi & Sethi, Suresh P., 2008. "The Genuine Saving Criterion and the Value of Population in an Economy with Endogenous Population Changes," MPRA Paper 14622, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14622
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    File URL: https://mpra.ub.uni-muenchen.de/14622/1/MPRA_paper_14622.pdf
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    References listed on IDEAS

    as
    1. Kenneth J. Arrow & Partha Dasgupta & Karl-Göran Mäler, 2003. "The genuine savings criterion and the value of population," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 21(2), pages 217-225, March.
    2. repec:reg:rpubli:132 is not listed on IDEAS
    3. Pezzey, J., 1992. "Sustainable Development Concepts; An Economic Analysis," Papers 2, World Bank - The World Bank Environment Paper.
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    Cited by:

    1. Raouf Boucekkine & Giorgio Fabbri & Fausto Gozzi, 2010. "Life span and the problem of optimal population size," Working Papers halshs-00536073, HAL.

    More about this item

    Keywords

    Savings; population policy; value of the population; economic growth; optimal control; phase diagram; dynamic programming;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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