A Dynamic Consumption Model and Optimization of Utility Functionals

Kulikowski, R. (1975). A Dynamic Consumption Model and Optimization of Utility Functionals. IIASA Working Paper. IIASA, Laxenburg, Austria: WP-75-121

Preview

Text WP-75-121.pdf Download (305kB) | Preview

Abstract

The present paper has been motivated by the research concerned with the construction of a complex, long-range, national development model. The model -- MRI -- is being constructed at the Institute of Organization and Management of the Polish Academy of Sciences. It consists of three main submodels: production, consumption and environment. The consumption submodel is characterized by the utility function with parameters which are estimated on the basis of past statistical data. It takes into account the utility structure changes caused by GNP per capita and the change in price indices. The model is normative, in the sense that one can investigate the national growth path as a result of alternative development strategies in terms of productive investment and government expenditures in the fields of education, R&D, health service, pollution control, etc.

The optimum investment strategies for MRI have already been derived elsewhere. In the present paper, an effort is being made to derive the optimum consumer and government expenditure strategies which maximize the utility functional.

Actions (login required)

View Item