Study week on the econometric approach to development planning

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Monograph

Identifikator:: 1824422792

URN:: urn:nbn:de:zbw-retromon-217476

Document type:: Monograph

Title:: Study week on the econometric approach to development planning

Place of publication:: Amsterdam [u.a.]

Publisher:: North-Holland Publ. Co. [u.a.]

Year of publication:: 1965

Scope:: XLVII, 1259 S.; graph. Darst.

Digitisation:: 2022

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Croissance optimales dans un modele macroeconomique / E. Malinvaud, Institut National de la Statistique et des Etudes Economiques Paris - France

Collection:: Economics Books

SEMAINE D ETUDE SUR LE ROLE DE IL ANALYSE ECONOMETRIOUE ETC. 307 Section 6 is devoted to the case of a linear utility function, a case that is often considered, for instance when one chooses to maximize a discounted sum of the future consumption stream. The formulas found in section 3 are no longer applicable as such, because the solution of the recurrence equations leads to non-feasible programs. However, the general approach can be maintained if one introduces upper and lower bounds on consumption per head c, and labor input per head #,. Depending on the values of the parameters, the shape of the optimal program varies a great deal. I consider precisely a few cases which may be of some interest. For instance, if the initial endowment of capital is small and if leisure has some value even when consumption is at its minimum, the optimal program may imply that the labor input be not pushed at its maximum in the first periods, but be increased progressively as capital accumulates, consumption being nevertheless kept at its minimum until a sufficiently high capital stock has been reached (see figure 5 in the text). Notwithstanding the fact that it permits interesting insights. the assumption of a linear utility function is not quite satisfac- tory. In all cases, the optimal program exhibits some discon- tinuities in its time shape, discontinuities that go against com- mon sense. For instance, consumption may switch in one period from its minimum to its maximum value. This unsatisfactory feature is partly due to the simplifica- tions made in the model, notably to the assumption of a one- commodity, one-sector world, and to the assumption of inde- pendence among the utilities for different periods. However, optimal programs in more elaborate models would present si- milar, even though less extreme, discountinuities as long as linear utilities would be assumed. The unescapable conclusion seems to be that. for the problems considered here, one must Malinvaud - pag. 7

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