Optimum Economic Growth in an Aggregative Model of Capital Accumulation: A Turnpike Theorem

Recent contributions to the theory of optimum economic growth, for example, in [1], [3], [8] or [10], like Ramsey’s seminal article [6], have been primarily concerned with the implications of maximizing the social welfare generated by the entire stream of future consumption. As an alternative formulation, in this paper it is postulated that only the social welfare associated with future consumption over some finite period is of direct concern; generations beyond the horizon are accounted for only insofar as a lower bound on the terminal capital stock is prescribed. Then, within a closed, aggregative framework, the behavior of growth paths which are optimum with respect to this social welfare is investigated.