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PONTIFICIAE ACADEMIAE SCIENTIARVM SCRIPTA VARIA - 28
not open to doubt if, but only if, we are limiting ourselves to the
physical point of view. But if human psychology is taken into
account, this result does not remain valid. There are two reasons
for this; I can give two examples. The first case is where the shape
of the time preference curve implies a high preference for the future.
In my book « Economie et intérét » in 1947 I studied a model in
which the difference i-p between the rate of interest and the rate
of growth of the primary income is negative, but nevertheless there
is optimality in the paretian sense with an infinite horizon. My
second example relates to the case where the utility functions are
functions not only of consumption, but also of capital goods. If
people want very much to possess capital goods, then there can be
an optimal path with a negative difference i-p.
My fifth point is that my Econometrica paper is only one study
carrying forward things described in many preceding papers and I
believe that I gave very precise consideration to the problem of the
optimal path as long ago as 1947 in my book « Economie et inté-
rét », that is fifteen years before the DEsrOUSSEAUX, PHELPS, JoAN
ROBINSON, SWAN and Von WEIZSACKER studies which Professor
KoorMANS mentioned.
MALINVAUD
In order to avoid the conclusion that no optimal program would
exist, one has suggested that we drop the assumption of an infinite
horizon. I cannot accept this point of view. Considering an infinite
horizon often leads to interesting results concerning the non-opti-
mality of programs which would appear as optimal if time were
limited to some specific date, however far in the future this date
may be. In such non-optimal programs, the economy is accumu-
lating too much capital all the time and never take for consumption
the full benefit of its high capital endowment. I see no way of
discarding these programs if a finite horizon is adopted and if the
terminal capital stock is taken as a constraint.
51 Malinvaud - pag. 82
