Uzawa’s transformation and optimal control problems with variable rates of time preference
Uzawa (1968) first introduced a simple and appealing method for reducing problems with variable rates of time preference to single-state systems by transforming the time scale from t to Δ, a utility discount factor. This transformation has been used extensively, particularly in models of international trade and finance (e.g., Obstfeld, 1981a, 1981b, 1982, Engel and Kletzer, 1989, and Turnovsky, 1997), where the use of a variable rate of time preference avoids some of the “disturbing...[Show more]
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