Tjalling Koopmans’s Optimal Economic Growth

S. Niggol Seo

Chapter Chapter 10 in The Economics of Optimal Growth Pathways, 2023, pp 209-234 from Springer

Abstract: Abstract Koopmans laid out a theoretical foundation for the pursuit by a national economy of an optimal economic growth pathway. In the Koopmans’s framework, the objective of the national economy is to maximize the social welfare defined as the sum of the flow of discounted social utilities over an infinite time horizon. The individual citizen’s welfare is a function of a generalized consumption. The economy’s production is determined by a production function whose inputs are labor, capital, and technological progress. In the optimal economic growth trajectory, the economy is predicted to grow approximately at the rate of population growth plus the discount rate plus the rate of unforeseeable technological growth, all of which depend on many economic variables such as market interest rates, social inequality aversion, and consumption patterns.

Keywords: Optimal economic growth; Social welfare function; Production function; Population; Technological growth; Capital accumulation; Social rate of time preference; Market interest rate; Social inequality aversion; Consumption (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-20754-9_10

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DOI: 10.1007/978-3-031-20754-9_10

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