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Optimal control of an infinite-dimensional problem with a state constraint arising in the spatial economic growth theory

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  • Raouf Boucekkine

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Carmen Camacho

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Weihua Ruan

    (Purdue University [West Lafayette])

Abstract

We use Ekeland's variational principle together with Pontryagin's maximum principle to solve an optimal spatiotemporal economic growth model with a state constraint (no-negative capital stock) where capital law of motion follows a diffusion equation. We obtain the set of necessary optimal conditions for the solution to meet the state constraints for all time and locations. The maximum principle allows to reduce the infinite-horizon optimal control problem into a finite-horizon one ultimately leading to prove the uniqueness of the optimal solution with positive capital, and non-existence of the optimal solution with eventually strictly positive capital when the time discount rate is too large or too small.

Suggested Citation

  • Raouf Boucekkine & Carmen Camacho & Weihua Ruan, 2024. "Optimal control of an infinite-dimensional problem with a state constraint arising in the spatial economic growth theory," Working Papers halshs-04630098, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04630098
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04630098
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