Optimal Stationary Regimes in Kaldor’s Business Cycle Controlled Model

Abstract

The paper studies the optimal stationary regimes in a controlled version of N. Kaldor’s business cycle model. The indicator characterizing the demand stimulation by the state is taken as the control parameter. The cost of the demand-generating policy is simulated using a quadratic function, and the instantaneous utility function is defined as the value of the national income with allowance for the cost of demand stimulation. The existence of the optimal stationary regime is proved in the relevant optimization problem and the conditions that guarantee its uniqueness are presented. It is shown that the optimization of the stationary regime always leads to an increase in both the value of the instantaneous utility function and the value of consumption compared to the stationary states of the original (uncontrolled) model. The numerical simulation results are also considered.