Unformatted text preview: is there one that would be optimal? The answer to this question requires that we ±rst de±ne an optimality criterion. Once this is done, we need to develop the tools necessary to solve such problems. This is the object of the second part of this book. We will provide an introduction to the calculus of variations and the Pontryagin maximum principle. Care will be taken to give economic interpretations of each, i.e. intuitive ways of obtaining their fundamental equations. 1...
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- Fall '08
- Economics, pontryagin maximum principle, Optimal Growth Theory, possible growth paths