Article
Optimal Control of Investments in Old and New Capital Under Improving Technology
Mathematics Faculty Publications
Document Type
Article
Publication Date
1-1-2017
Abstract
An optimal control problem for nonlinear integral equations of special kind is analyzed. It considers a firm’s investment into age-dependent capital under improving technology and limited substitutability among capital of different ages. We prove the existence of solutions and analyze their structure. It is shown that the initially bang-bang optimal investment switches to an interior one and eventually converges to a steady-state trajectory that represents balanced economic growth. The obtained analytic outcomes contribute to better understanding of investment policies under technological change.
Citation Information
Natali Hritonenko, Nobuyuki Kato and Yuri Yatsenko. "Optimal Control of Investments in Old and New Capital Under Improving Technology" (2017) Available at: http://works.bepress.com/natali-hritonenko/38/