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Non-optimality of the Myopic Decision Rule: The Case of a Two-Sector Open Economy

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  • TAPAN BISWAS

    (Department ofEconomics, University of California, Santa Barbara)

Abstract

This paper is concerned with optimal allocation of investment in a two-sector open economy with non-shiftable capital. We have assumed a stationary population and fixed terms of trade. It has been shown that, if the economy starts with a small amount of capital in each sector, the myopic decision rule under static expectations will not be compatible with the conditions of optimal in- vestment allocation.

Suggested Citation

  • Tapan Biswas, 2012. "Non-optimality of the Myopic Decision Rule: The Case of a Two-Sector Open Economy," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 4(1), pages 157-163, June.
    • Handle: RePEc:ren:journl:v:4:y:2012:i:1:p:157-163
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    Cited by:

    1. Taradas Bandyopadhyay & Tapan Biswas, 1997. "Allocation of investment in a new market economy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 6(3), pages 359-375.

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