Parametric Analysis of the Sensitivity of a Functional on the Basis of the Non-Classical Model of Optimal Economic Growth

Abstract

We study the sensitivity of a functional on the basis of the macroeconomic model. This analysis is a calculation of the derivative with respect to the parameters of the functional characterizing the optimal trajectory. To solve this problem, we apply an approach using conjugate functions and bring the results down to concrete computations. As the model we use a neoclassical model of optimal economic growth and estimate the sensitivity with the growth rate of civilian labor force of national economies in three European countries. Our results can be recommended for analysis and practical use by the relevant authorities. Since the ultimate goal of modeling is to consider feasible alternatives when making decisions, such analysis can be useful.