Adaptive rolling plans are good

Adaptive rolling plans are good

 

Piotr Maćkowiak

 

Keywords: indirect utility function, good plans, adaptive rolling planning, multisector model

 

Summary: Here we prove the goodness property of adaptive rolling plans in a multisector optimal growth model under decreasing returns in deterministic environment. Goodness is achieved as a result of fast convergence (at an asymptotically geometric rate) of the rolling plan to balanced growth path. Further on, while searching for goodness, we give a new proof of strong concavity of an indirect utility function - this result is achieved just with help of some elementary matrix algebra and differential calculus.

 

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