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RESEARCH PAPERS

Optimal Control of a National Economic System With Full Employment

[+] Author and Article Information
L. T. Yeo, K. L. Teo

Dept. of Applied Mathematics, University of New South Wales, Kensington, N. S. W., Australia

J. Dyn. Sys., Meas., Control 98(1), 80-84 (Mar 01, 1976) (5 pages) doi:10.1115/1.3426991 History: Received May 12, 1975; Online July 13, 2010

Abstract

In this paper, we consider an optimal control problem of a national economic system with full employment in which the “Marginal Propensity to Save” and the “Profit Margin” are treated as control variables. This problem is modelled and modified on the basis of the cyclical growth theory developed by Keynes, Phillips, Bergstrom [2], The well-known Pontryagin Maximum Principle and the transversality condition [6] are then applied to obtain the optimum saving policy and profit margin following the steps of Ahmed and Yeo [1]. For illustration, a numerical example is solved using Davidon, Fletcher, Powell method with Fibonacci search technique in the last section.

Copyright © 1976 by ASME
Topics: Optimal control
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