This paper begins by formulating a finite horizon linear programming model for economic development. The formulation allows for heterogeneous capital goods and for nonnegativity constraints upon investment in each sector. It is then proved that a certain set of conditions are sufficient to ensure that an optimal solution to this T period, finite horizon plan will also coincide with an optimal solution during the first T periods of an infinite horizon plan. Among the restrictive conditions imposed to prove this sufficiency theorem are the following: gradualist consumption paths, no primary factors that cannot themselves be produced within the economy, a Leontief technology, and a characterization of the optimal finite horizon solution as one in which the terminal investment and output levels are positive. An illustrative numerical example is provided.
MLA
Manne, Alan S.. “Sufficient Conditions for Optimality in an Infinite Horizon Development Plan.” Econometrica, vol. 38, .no 1, Econometric Society, 1970, pp. 18-38, https://www.jstor.org/stable/1909238
Chicago
Manne, Alan S.. “Sufficient Conditions for Optimality in an Infinite Horizon Development Plan.” Econometrica, 38, .no 1, (Econometric Society: 1970), 18-38. https://www.jstor.org/stable/1909238
APA
Manne, A. S. (1970). Sufficient Conditions for Optimality in an Infinite Horizon Development Plan. Econometrica, 38(1), 18-38. https://www.jstor.org/stable/1909238
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