Nonlinear stabilizer constructing for two-sector economic growth model

Tarasyev AM & Usova AA (2010). Nonlinear stabilizer constructing for two-sector economic growth model. Proceedings of the Institute of Mathematics and Mechanics UrB RAS 16 (5): 297-307.

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Abstract

This paper is devoted to create optimal trajectories in the model which balances growth trends of investments in capital and labor efficiency. The model is constructed within the framework of classical approaches of the growth theory. It is based on three production factors: capital, educated labor and useful work. It is assumed that capital and educated labor are invested endogenously, and useful work is an exogenous flow. The level of GDP is described by an exponential production function of the Cobb-Douglas type. The utility function of the growth process is given by an integral consumption index discounted on the infinite horizon. The optimal control problem is posed to balance investments in capital and labor efficiency. The problem is solved on basis of dynamic programming principles. Series of Hamiltonian systems are examined including analysis of steady states, properties of trajectories and their growth rates. A novelty of the solution consists in construction of nonlinear stabilizers arranged on the feedback principle which lead the system from any current position to an equilibrium steady state. Growth and decline trends of the model trajectories are studied for all components of the system and their proportions including: dynamics of GDP, consumption, capital, labor efficiency, investments in capital and labor efficiency.

Item Type: Article
Uncontrolled Keywords: Optimal control; Nonlinear control system; Nonlinear stabilizer; Economic systems
Research Programs: Dynamic Systems (DYN)
Bibliographic Reference: Proceedings of the Institute of Mathematics and Mechanics, Ural Branch of RAS; 16(5):297-307 (2010)
Depositing User: IIASA Import
Date Deposited: 15 Jan 2016 08:43
Last Modified: 29 Aug 2016 13:27
URI: http://pure.iiasa.ac.at/9198

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