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Adaptive Rolling Plans Are Good


  • Maćkowiak, Piotr


Here we prove the goodness property of adaptive rolling plans in a multisector optimal growth model under decreasing returns in deterministic environment. Goodness is achieved as a result of fast convergence (at an asymptotically geometric rate) of the rolling plan to balanced growth path. Further on, while searching for goodness, we give a new proof of strong concavity of an indirect utility function – this result is achieved just with help of some elementary matrix algebra and differential calculus.

Suggested Citation

  • Maćkowiak, Piotr, 2009. "Adaptive Rolling Plans Are Good," MPRA Paper 42043, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:42043

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    References listed on IDEAS

    1. Benhabib, Jess & Nishimura, Kazuo, 1981. "Stability of Equilibrium in Dynamic Models of Capital Theory," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 22(2), pages 275-293, June.
    2. Venkatesh Bala & Mukul Majumdar & Tapan Mitra, 1991. "Decentralized evolutionary mechanisms for intertemporal economies: A possibility result," Journal of Economics, Springer, vol. 53(1), pages 1-29, February.
    3. Takayama,Akira, 1985. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521314985, May.
    4. Venditti, Alain, 1997. "Strong Concavity Properties of Indirect Utility Functions in Multisector Optimal Growth Models," Journal of Economic Theory, Elsevier, vol. 74(2), pages 349-367, June.
    5. Michael Kaganovich, 1998. "Decentralized Evolutionary Mechanism of Growth in a Linear Multi-sector Model," Metroeconomica, Wiley Blackwell, vol. 49(3), pages 349-363, October.
    6. Benhabib, Jess & Nishimura, Kazuo, 1979. "On the Uniqueness of Steady States in an Economy with Heterogeneous Capital Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(1), pages 59-82, February.
    7. Benhabib, Jess & Nishimura, Kazuo, 1979. "The hopf bifurcation and the existence and stability of closed orbits in multisector models of optimal economic growth," Journal of Economic Theory, Elsevier, vol. 21(3), pages 421-444, December.
    8. Kaganovich, Michael, 1996. "Rolling planning: Optimality and decentralization," Journal of Economic Behavior & Organization, Elsevier, vol. 29(1), pages 173-185, January.
    9. Lionel W. McKenzie, 2005. "Classical General Equilibrium Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633302, January.
    10. S. M. Goldman, 1968. "Optimal Growth and Continual Planning Revision," Review of Economic Studies, Oxford University Press, vol. 35(2), pages 145-154.
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    More about this item


    indirect utility function; good plans; adaptive rolling-planning; multisector model;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis


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