SEMAINE D'ÉTUDE SUR LE ROLE DE L ANALYSE ECONOMETRIQUE ETC.

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In section 4, I present an application of the above analysis
to an aggregate version of the model recently built bv Roy
RADNER.

Population and labor input increase at a constant rate.
The production function is such that S, appears as a CoBs-DoucLas
 function of N, and K, with neutral technical progress
expanding at a constant rate. The period utility function is
proportional to the logarithm of c,.
In this model, the recurrence equations (22) can be solved
explicitly to give equation (43). The regular programs are
thus determined. For instance, the diagram here shows the
evolution of K, for three programs satisfying equation (43)
but starting from different initial allocations, the consumption
C, Increasing when we pass from program r to programs ?
and -

Programs 1 and 2 are feasible and therefore regular.
Program 3 is not feasible since K, becomes negative after
some time. Program 2 is definitely prefered to program 1 be-17



Malinvaud - pag. 5