Optimization in Age-Structured Dynamic Economic Models

Michael Freiberger, Michael Kuhn, Alexia Fürnkranz-Prskawetz, Miguel Sanchez-Romero and Stefan Wrzaczek ()
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Michael Freiberger: International Institute for Applied Systems Analysis (IIASA)
Miguel Sanchez-Romero: Institute of Statistics and Mathematical Methods in Economics, Vienna University of Technology
Stefan Wrzaczek: International Institute for Applied Systems Analysis (IIASA)

Chapter Chapter 4 in The Unaffordable Price of Static Decision-making Models, 2025, pp 35-62 from Springer

Abstract: Abstract Age-structured optimal control models experience increasing applications in various research fields including, e.g., demography, economics, operations research, epidemiology, and environmental economics. In this paper we present the mathematical theory and potential applications of age-structured optimal control models. We first state the general form of the problem and present the necessary optimality conditions. To illustrate the mathematical theory we introduce a toy model on air pollution, where consumption induces pollution which in turn negatively affects utility, fertility, and mortality. We solve the model analytically and present numerical simulations. The potential of an age-structure approach to solve non-standard optimal control models is demonstrated by considering optimal control models with random switches or time-lags and delays.

Keywords: Age-structured optimal control; McKendrick-von Foerster equation; Non-standard optimal control; Random switch; Optimal control with time-lag or delay (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:isochp:978-3-031-88638-6_4

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DOI: 10.1007/978-3-031-88638-6_4

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