Abstract
The von Neumann ray determines the proportions of maximal balanced growth in a von Neumann technology. The economic growth trajectory, which realizes the maximum possible growth rate, that the economy could with-stand for infinite time is located on this ray. Let us give a more formal discription of the problem being discussed. The trajectory x(0),…, x(t),… generated by this technology is called stationary if the proportions between goods in the state x(t) are independent of time t. A stationary trajectory can be written in the form rm x (t) = γtx where x = x(0) is the initial state. This trajectory is generated by a technologically feasible activity (x, y) under which γx ≤ γ1. Usually a stationary trajectory is called the trajectory of balanced growth (although actual growth will take place only for γ > 1). The maximum number γ which enables a balanced growth is called the von Neumann (or technological) rate of growth for the technology Z. Thus the technological rate α is the solution of the following optimization problem find α = max γ subject to
If y ≥ αx, the process (x, y) is called the von Neumann activity (process), the corresponding vector x – the von Neumann vector and the ray passing through x – the von Neumann ray.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Kemeny, J., O. Morgenstern, and G. Thompson. 1956. A generalization of the von Neumann model of an expanding economy. Econometrica 24: 115–135.
Makarov, V.L., and A.M. Rubinov. 1977. Mathematical theory of economic dynamics and equilibria. New York: Springer-Verlag.
Nikaido, H. 1964. Persistence of continual growth near the von Neumann ray: A strong version of the Radner turnpike theorem. Econometrica 32(1–2): 151–163.
Radner, R. 1961. Paths of economic growth that are optimal with regard only to final states; A turnpike theorem. Review of Economic Studies 28: 98–104.
von Neumann, J. 1945–6. A model of general economic equilibrium. Review of Economic Studies. 13: 1–9.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Rubinov, A. (2018). Von Neumann Ray. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1866
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_1866
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences