Instabilities in Concave, Dynamic, Economic Optimization

Gustav Feichtinger and Franz Wirl

Journal of Optimization Theory and Applications, 2000, vol. 107, issue 2, No 5, 275-286

Abstract: Abstract An important and numerous literature argues that nonconcavity (often convexity with respect to the state) of the Hamiltonian leads to multiple steady states, instability, and a threshold. This threshold property provides a powerful paradigm to explain history dependency and hysteresis. This paper shows that economically relevant properties (in particular, multiple steady states and thresholds) are possible in strict concave models too. Two corresponding necessary conditions with intuitive economic interpretation are derived.

Keywords: optimal control; thresholds; multiple equilibria; instability; concavity (search for similar items in EconPapers)
Date: 2000
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Citations: View citations in EconPapers (10)

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DOI: 10.1023/A:1026408814862

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