Swapan Dasgupta

Intertemporal Equity and Hartwick's Rule in an Exhaustible Resource Model

In a standard exhaustible resource model, it is known that if, along a competitive path, investment in the augmentable capital good equals the rents on the exhaustible resource (known as Hartwicks rule), then the path is equitable in the sense that the consumption level is constant over time. In this paper, we show the converse of this result: if a competitive path is equitable, then it must satisfy Hartwicks rule.

A local analysis of stability and regularity of stationary states in discrete symmetric optimal capital accumulation models

Abstract In discrete time optimal capital accumulation models, where the period utilities have a certain “symmetry” property, a complete characterization of local stability of stationary states is obtained in terms of the characteristic roots of the product of certain submatrices of the Hessian of the utility function. This is used to analyze the connection between stability and properties of the effects of parameter changes on the stationary state. Certain differences in the results in discrete and continuous models are noted. A special case where utilities are “separable” in initial stocks and net investment is also treated.

Characterization of intertemporal optimality in terms of decentralizable conditions: The discounted case

The paper studies the problem of characterizing the optimality of competitive programs in terms of “decentralizable” conditions. We show that, when future utilities are discounted, and the optimal stationary stock is proportionately expansible, then optimality of competitive programs can be characterized by the condition that the scalar product of the difference of prices and quantities, between those of the given competitive program and those of the optimal stationary program, be non-positive period by period.

On the Welfare Significance of National Product for Economic Growth and Sustainable Development

This paper formulates an investment value transversality condition in a continuous-time growth model, which characterizes competitive paths along which current net national product measures the welfare achieved along the path. This transversality condition requires that the present value of net investment goes to zero asymptotically. An example provided shows that, in general, competitive paths do not necessarily satisfy this condition. It is also shown that, in a standard growth model including an exhaustible resource as an essential factor of production, competitive paths always satisfy this condition. Implications regarding national income accounting procedures and sustainable development policies are discussed. JEL Classification Numbers: D90; O11; O41; Q32.

Intertemporal Optimality in a Closed Linear Model of Production

The paper presents the main results on intertemporal optimality with discounting in a closed linear model of production, including the price characterization of optimal programs, the existence of a steady-state optimal program, and a turnpike property of optimal programs from arbitrary initial stocks. Some of these results are used to provide a characterization of the optimality of competitive programs in terms of a “decentralizable” condition.

A note on comparative statics and dynamics of stationary states

Abstract Certain results are communicated regarding effects of parameter changes, when the stationary state is stable, on the stationary state and an optimal paths in its neighbourhood in discrete time multi-sectoral optimal growth models where period utilities are discounted.

Comment on Luigi Zingales: Why not Consider Maximum Reserve Ratios?

Why not set a maximum on bank reserves, wonders Swapan Dasgupta?

Infinite-horizon competitive programs are optimal

For infinite-horizon optimal-growth problems the standard result in the literature says that a program is optimal if and only if associated with it is a sequence of present-value prices at which the program satisfies (i) a set of myopic “competitive conditions,” and (ii) an asymptotic “transversality condition”. The principal result of this paper points out the interesting and surprising fact that at least for a class of multisector models where the production side is described by a simple linear model, and there are some limiting primary factors, the competitive conditions alone characterize an optimal program.

Patterns of Trade and Growth Under Increasing Returns: Escape from the Poverty Trap—a Comment

The paper generalizes a two-sector model of trade and growth in which the investment good sector exhibits an initial phase of increasing returns. It dispenses with the restriction that the utility function be of the isoelastic type. Allowing for general concave utility functions, it demonstrates that the qualitative properties of optimal growth and trade patterns are robust with respect to a wide choice of functional forms. JEL Classification Numbers: O41, F12.