Optimal timing of regime switching in optimal growth models: A Sobolev space approach

This paper analyses the optimal timing of switching between alternative and consecutive regimes in optimal growth models. We derive the appropriate necessary conditions for such problems by means of the standard techniques from calculus of variations and some basic properties of Sobolev spaces. Keywords: Multi-stage optimal control, Sobolev spaces, Optimal growth models JEL classi…cation: C61; O41 Department of Economics, Bilkent University. e-mail: [email protected] yCNRS, Exeter University Business School, Paris School of Economics. e-mail: [email protected] zCorresponding author. Department of Economics, Bilkent University. e-mail: [email protected]