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Recent Models in Dynamic Economics: Problems of Estimating Terminal Conditions

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  • Sengupta, Jati K.

Abstract

Recent policy applications of control theory methods in dynamic economic models raise the issue of imposing the transversality condition for determining a unique optimal control policy. In a stochastic framework this issue involves alternative methods of estimation, which are discussed here both theoretically and empirically. The economic implications of the alternative methods are analyzed here in some detail through several recent dynamic models in economic growth and exchange rate instability.

Suggested Citation

  • Sengupta, Jati K., 1997. "Recent Models in Dynamic Economics: Problems of Estimating Terminal Conditions," University of California at Santa Barbara, Economics Working Paper Series qt05g0d8gm, Department of Economics, UC Santa Barbara.
    • Handle: RePEc:cdl:ucsbec:qt05g0d8gm
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    References listed on IDEAS

    as
    1. Gregogy, A.W. & Pagan, A.R. & Smith, G.W., 1990. "Estimating Linear Quadratic Models With Integrated Processes," RCER Working Papers 247, University of Rochester - Center for Economic Research (RCER).
    2. repec:cdl:ucsbec:12-96 is not listed on IDEAS
    3. Sengupta, Jati K. & Okamura, Kumiko, 1996. "Learning by doing and openness in Japanese growth: A new approach," Japan and the World Economy, Elsevier, vol. 8(1), pages 43-64, March.
    4. Minford, Patrick & Matthews, Kent & Marwaha, Satwant, 1979. "Terminal conditions as a means of ensuring unique solutions for rational expectations models with forward expectations," Economics Letters, Elsevier, vol. 4(2), pages 117-120.
    5. Kennan, John, 1979. "The Estimation of Partial Adjustment Models with Rational Expectations," Econometrica, Econometric Society, vol. 47(6), pages 1441-1455, November.
    Full references (including those not matched with items on IDEAS)

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