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Differential-algebraic equations of the multicriteria locally optimal trajectory of economic restructuring

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Abstract

This paper introduces a system of differential-algebraic equations with non-negativity constraints that determines a locally optimal trajectory of economic restructuring. It aims to provide the maximum economic growth constrained by the steepest possible decrease in energy consumption and the greenhouse gas emissions. The input–output models (conventional, energy-related, and greenhouse gas emissions related) and factorial models of energy consumption and greenhouse gas emissions are used as a basis. The goal is achieved by changing the structure of the gross output in the direction of the tangent line to the optimal trajectory. This trajectory may serve as a benchmark for the assessment of the actual structural change resulting from the interplay of market forces and government intervention or as a roadmap for economic development programs. The local optimization property makes the suggested trajectory attractive in situations when the best short-term performance prevails, while the long-term objectives should be taken into account as well.

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Authors and Affiliations

  1. Mathematics Department, Hostos Community College, City University of New York, 500 Grand Concourse, Room B-432, Bronx, NY, 10451, USA

    Alexander Vaninsky

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  1. Alexander Vaninsky
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Correspondence to Alexander Vaninsky.

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Vaninsky, A. Differential-algebraic equations of the multicriteria locally optimal trajectory of economic restructuring. Int. J. Dynam. Control 6, 1767–1775 (2018). https://doi.org/10.1007/s40435-018-0419-x

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