Optimal Consumption Plans with Uncertain Planning Periods

Somdeb Lahiri

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: In this paper we study the one sector optimal growth model with uncertain planning horizons. We prove the non-existence of steady states, and the dependence of optimal capital stock at time ‘t’ on the conditional probability of a ‘t’ period planning horizon given that the planning process does not terminate before time ‘t’. We illustrate our results using a consumption optimal growth model and Cobb-Douglas technology.

Date: 1987-10-01
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Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:wp00782

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