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Optimal Growth with Many Sectors

Franz Gehrels

The overriding force in economic growth is progress, both in general state of the arts, and in applied technology. These are qualitatively different and their optimization is explored with dynamic programming. With numerous goods and factors of production the production frontier becomes a hyperplane. Its dimensionality depends on the number and positioning of activities around the vector of factor endowments, as is shown with the simplex method. There may be market distortions of the ceiling and departures from it; policy measures are examined for the U.S. and Germany.
Contents: Innovation and progress in the arts – Optimal saving and resource depletion – Multiplicity of goods and factors – Frontier expansion – Departures from the frontier and corrective measures.