A SIMPLE ILLUSTRATIVE OPTIMAL GROWTH MODEL A. From Descriptive to Optimal Growth

Such a trade-off curve for time t might be as depicted in Figure 1. For the BSSDG model, a point on this time-t consumption-investment production possibility frontier is determined by the direct specification of a consumption demand function for c(t). For example, we considered the particular case in which consumption demand was More precisely, f(0) = 0, f(k) is continuous over all k ≥ 0 and twice continuously differentiable over all k > 0 with f ′(k) > 0 and f ′′(k) < 0, limk→∞ f ′(k) = 0, and limk→0 f ′(k) =∞. All figures are presented together at the end of these notes.