Infinite-horizon continuous-time growth models

Abstract

In this paper we examine a continuous-time infinite-horizon economic growth model with non-convexities. First we show that an optimal program exists and the value of the problem can be obtained as the limit of the values of the finite-horizon approximations. If we are only interested in the existence part, then we show that the hypotheses can be weakened substantially to incorporate economically significant cases. Finally we obtain a transversality condition for optimality that does not involve dual variables (prices).