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RESEARCH PAPERS

Optimality and Perturbational Stability of Economic Growth Trajectories

[+] Author and Article Information
W. D. O’Neill

Dept. of Systems Engineering, University of Illinois at Chicago Circle, Chicago, Ill.

R. F. Kosobud

Dept. of Economics, University of Illinois at Chicago Circle, Chicago, Ill.

J. Dyn. Sys., Meas., Control 98(1), 75-79 (Mar 01, 1976) (5 pages) doi:10.1115/1.3426990 History: Received July 22, 1975; Online July 13, 2010

Abstract

The neoclassical growth model of a capitalistic economy is investigated for stability and optimality properties under the assumption that firms maximize the rate of reduction in their production costs. An optimal trajectory is then shown to be stable relative to exogenous disturbances if it meets certain sufficient conditions placed on its time-varying, linear approximant system in a neighborhood near the trajectory.

Copyright © 1976 by ASME
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