Optimal Economic Growth

  • Terry L. Friesz
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 135)


The theory of optimal economic growth is a branch of economic theory that makes direct and sophisticated use of the theory of optimal control. As such, the models of optimal economic growth that have been devised and reported in the economics literature are relatively easy for a person who has mastered the material of Chapters 3 and 4 of this book to comprehend. Among other things, this chapter shows how aspatial optimal economic growth theory may be extended to study optimal growth of interdependent regions in a national economy. Moreover, working through the analyses presented in this chapter provides a means of assessing and improving one’s mastery of the key mathematical concepts from the theory of optimal control that were introduced in previous chapters, especially the analysis and interpretation of optimality conditions and singular controls.


Optimal Control Problem Public Investment Adjoint Equation Public Capital Singular Control 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

List of References Cited and Additional Reading

  1. Arrow, K. J. and M. Kurz (1970). Public Investment, the Rate of Return, and Optimal Fiscal Policy. Baltimore: The Johns Hopkins University Press.Google Scholar
  2. Bagchi, A. (1984). Stackelberg Differential Games in Economic Models. Berlin: Springer-Verlag.CrossRefGoogle Scholar
  3. Bazaraa, M., H. Sherali, and C. Shetty (1993). Nonlinear Programming: Theory and Algorithms. New York: John Wiley.Google Scholar
  4. Bellman, R. E. (1957). Dynamic Programming. Princeton: Princeton University Press.Google Scholar
  5. Datta-Chaudhuri, M. (1967). Optimum allocation of investments and transportation in a two-region economy. In K. Shell (Ed.), Essays on the Theory of Optimal Economic Growth, pp. 129–140. MIT Press.Google Scholar
  6. Domazlicky, B. (1977). A note on the inclusion of transportation in models of the regional allocation of investment. Journal of Regional Science 17, 235–241.CrossRefGoogle Scholar
  7. Friesz, T. and N. Kydes (2003). The dynamic telecommunications flow routing problem. Networks and Spatial Economics 4(1), 55–73.CrossRefGoogle Scholar
  8. Friesz, T. and J. Luque (1987). Optimal regional growth models: multiple objectives, singular controls, and sufficiency conditions. Journal of Regional Science 27, 201–224.CrossRefGoogle Scholar
  9. Hadley, G. and M. Kemp (1971). Variational Methods in Economics. North-Holland Amsterdam.Google Scholar
  10. Hahn, F. and R. Matthews (1964). The theory of economic growth: a survey. The Economic Journal 74(296), 779–902.CrossRefGoogle Scholar
  11. Hotelling, H. (1978). A mathemathical theory of population. Environment and Planning A 10, 1223–1239.CrossRefGoogle Scholar
  12. Intriligator, M. (1964). Regional allocation of investment: comment. Quarterly Journal of Economics 78, 659–662.CrossRefGoogle Scholar
  13. Ohtsuki, Y. A. (1971). Regional allocation of public investment in an n-region economy. Journal of Regional Science 11, 225–233.CrossRefGoogle Scholar
  14. Pontryagin, L. S., V. G. Boltyanskii, R. V. Gamkrelidze, and E. F. Mischenko (1962). The Mathematical Theory of Optimal Processes. New York: Interscience.Google Scholar
  15. Puu, T. (1989). Lecture Notes in Economics and Mathematical Systems. New York: Springer-Verlag.Google Scholar
  16. Puu, T. (1997). Mathematical Location and Land Use Theory; An Introduction. New York: Springer-Verlag.Google Scholar
  17. Rahman, M. (1963a). Regional allocation of investment: An aggregative study in the theory of development programming. The Quarterly Journal of Economics 77(1), 26–39.CrossRefGoogle Scholar
  18. Rahman, M. (1963b). Regional allocation of investment: an aggregative study in the theory of development programming. Quarterly Journal of Economics 77, 26–39.CrossRefGoogle Scholar
  19. Ramsey, F. P. (1928). A mathematical theory of saving. Economic Journal 38, 543–559.CrossRefGoogle Scholar
  20. Sakashita, N. (1967a). Regional allocation of public investment. Papers in Regional Science 19(1), 161–182.CrossRefGoogle Scholar
  21. Sakashita, N. (1967b). Regional allocation of public investments. Papers, Regional Science Association 19, 161–182.CrossRefGoogle Scholar
  22. Sethi, S. P. and G. L. Thompson (1981). Optimal Control Theory: Applications to Management Science. Boston: Martinus Nijhoff.Google Scholar
  23. Tait, K. (1965). Singular Problems in Optimal Control. Ph. D. thesis, Harvard University, Cambridge, MA.Google Scholar
  24. Takayama, A. (1967). Regional allocation of investment: a further analysis. The Quarterly Journal of Economics, 330–337.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Dept. Industrial & Manufacturing EngineeringPennsylvania State UniversityUniversity ParkUSA

Personalised recommendations