Assessment of the Impact of Aggregated Economic Factors on Optimal Consumption in Models of Economic Growth

Krasovskii, A.A. ORCID: https://orcid.org/0000-0003-0940-9366 (2006). Assessment of the Impact of Aggregated Economic Factors on Optimal Consumption in Models of Economic Growth. IIASA Interim Report. IIASA, Laxenburg, Austria: IR-06-050

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Abstract

The problem of consumption-optimal economic growth is considered. In the model there are three factors of production: capital, labor and useful work, that interact in the production of homogenous output. At any instant of time a fraction of this homogeneous output can be allocated to investment in accumulation of capital and useful work. The gross domestic product (GDP) of a country is presented by the linear-exponential (LINEX) production function.

The general goals of the research can be formulated as follows:

-analysis of properties of the LINEX production function and identification of parameters under restrictions on elasticity coefficients;

-analysis of the Hamiltonian system of differential equations for the Pontryagin maximum principle in the optimal control problem;

-elaboration of an algorithm for constructing synthetic trajectories of optimal economic growth;

-development of software for numerical simulation and sensitivity analysis;

-comparison of real and synthetic trajectories of economic growth, and simulation of future scenarios.

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