On the nature of Suppes-Sen maximal paths in an aggregative growth model

This paper investigates the nature of paths in the standard neoclassical aggregative model of economic growth that are maximal according to the Suppes-Sen grading principle. This is accomplished by relating such paths to paths which are utilitarian maximal when an increasing (but not necessarily concave) utility function evaluates each period’s consumption. Dynamic properties of Suppes-Sen maximal paths, which lie entirely above or entirely below the golden-rule, are analyzed. An example is presented in which an explicit form of a consumption function is described, which generates only Suppes-Sen maximal paths. This consumption function is shown to generate consumption cycles, and violate the Pigou-Dalton transfer principle. Journal of Economic Literature Classification Numbers: D60, D70, D90.