Non-optimality of the Myopic Decision Rule: The Case of a Two-Sector Open Economy

Tapan Biswas

Review of Economic Analysis, 2012, vol. 4, issue 1, 157-163

Abstract: This paper is concerned with optimal allocation of investment in a two-sector open economy with non-shiftable capital. We have assumed a stationary population and fixed terms of trade. It has been shown that, if the economy starts with a small amount of capital in each sector, the myopic decision rule under static expectations will not be compatible with the conditions of optimal in- vestment allocation.

Date: 2012
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Journal Article: Non-optimality of the myopic decision rule: The case of a two-sector open economy (1974)
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Persistent link: https://EconPapers.repec.org/RePEc:ren:journl:v:4:y:2012:i:1:p:157-163

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