Econometrica: Jan 1968, Volume 36, Issue 1

Application of a Turnpike Theorem to Planning for Efficient Accumulation: An Example for Japan

https://doi.org/0012-9682(196801)36:1<172:AOATTT>2.0.CO;2-B
p. 172-186

Jinkichi Tsukui

A particular type of objective function is built in a linear programming version of the dynamic Leontief model so that the solution gives the path to accumulate the maximum value of capital stocks with the Neumann (turnpike) configuration in the terminal period of the program. In view of the author's turnpike theorem [8], leading the economy along this path is thought the safest method for a planning agency when desirable capital configuration in the future is unknown--as is usually the case. The model is applied to the Japanese economy for the periods 1955 to 1960, and the computed growth path is compared with the actual. Also, the relatively unstable nature of the dynamic Leontief model is shown by analysis of the computational results.

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