Recent Models in Dynamic Economics: Problems of Estimating Terminal Conditions
- Author(s): Sengupta, Jati K.
- et al.
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.