SSH, N

KOOPMANS

About the very interesting and remarkable condition 1, 1. Wa.
indicated that it was a sufficient condition — is it also a necessery
condition for the one member family of paths that satisfies the
three recursive conditions to be an optimal path? Or if it isn’.
is there any example of an optimal path that does not meet that
rondition?

MALINVAUD

Yes, there is an example of an optimal path that would not meet
that condition: in the case of the linear logarithmic model with
epsilon equal to zero, condition I is not satisfied because the lefthand
 member of (23) is just equal

KOOPMANS

I have the impression, though, that in most cases this condition
is just picking out that one path for which the recursive equations
can hold for all times. Is it so that any path that does not meet
condition 1 but satisfies the recursive requirements necessarily violates
 at some finite time, the sign restrictions on capital or consump:
tion? Or is that not correct?

Malinvaud - pag. 79