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- Title
On the Relative Stability and Optimality of Consumption in Aggregative Growth models: A Critical Analysis.
- Authors
Glycopantis, D.
- Abstract
This article presents a critical analysis of the paper On the Relative Stability and Optimality of Consumption in Aggregative Growth Models by J. K. Sengupta. This paper concentrates on part (a) of the paper. It is argued here that Sengupta missed a fundamental point, that is, when the planning horizon is infinite, optimal paths for the Sengupta model do not always exist. Furthermore, when they do exist, there is an analogous situation to that of a static maximization problem with the solution on the boundary of the feasible set. It is well known that when the utility integral, as welfare criterion, does not converge, it does not really make sense to require that its value be maximized. Hence in what follows, an alternative model of consumption streams employing the Weizsä-cker-Atsumi (W-A) overtaking criterion is presented. It is contended that a path is W-A optimal if it overtakes all other feasible paths. Sengupta also refers in to the need of employing the overtaking criterion when the planning horizon is infinite, but he seems to expect that this supports his argument. Finally, parts (b) and (c) of Sengupta's paper will be commented on. These comments also refer to problems created by the assumption that the length of the planning period is infinite.
- Subjects
CONSUMPTION (Economics); MATHEMATICAL models of economic development; ECONOMIC models; ECONOMIC policy; SENGUPTA, J. K.
- Publication
Economica, 1973, Vol 40, Issue 159, p283
- ISSN
0013-0427
- Publication type
Article
- DOI
10.2307/2552798