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Computing an Optimal Invariant Capital Stock

1982; Society for Industrial and Applied Mathematics; Volume: 3; Issue: 2 Linguagem: Inglês

10.1137/0603014

2168-345X

Philip C. Jones,

Monetary Policy and Economic Impact

This paper derives a new termination criterion for Lemke’s linear complementarily algorithm which is applied to the problem of computing a capital stock invariant under optimization for an economy with a linear technology and piecewise linear utility. We derive a condition which guarantees that the computed solution is nontrivial. When the economy has a Leontief technology and linear utility, we give a method for solving the associated linear complementarily problem in $O ( n^3 )$ operations.