Towards Golden Rule of Capital Accumulation: A Genetic Algorithm Approach
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References
Genetic Algorithms and Machine Learning
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Frequently Asked Questions (12)
Q2. What is the significance of the results of the current study?
In the current study a wellknown Darwinian principle inspired metaheuristic Genetic Algorithm is employed in maximizing the consumption (The Golden rule of capital accumulation) in terms of depreciation and capital accumulation.ย
Q3. what is the condition to achieve the Golden rule level of capital?
Initial condition to achieve the Golden rule level of capital is; marginal product of capital should be equals to depreciation rate.ย
Q4. How is the growth of society influenced by the consumption of the country?
Maximization of consumption is traditionally done by employing a long time consuming and computationally complex Solow modelbased mathematical approach.ย
Q5. What is the definition of the Golden rule of capital?
The Golden rule of capital indicates a state (a unique value of depreciation rate and amount of capital accumulated) that ensures maximum consumption level, thereby assures a strong economic growth [18].ย
Q6. How did Hommeset al. find the GA?
Hommeset al. [16] reveled that GA can converge to a series of near Nash equilibrium solutions, where the heterogeneous agent behavior has been modeled using GA.ย
Q7. What is the level of capital at which the economy reached steady state level?
๐โ.After achieving the steady state level of capital, there is a state where the authors maximize the consumption per worker that is generally known as the Golden rule level of capital [11, 18].ย
Q8. What is the significance of the results?
The optimum results indicated that in maximizing the consumption per worker the value of depreciation rate (๐ฟ) tends to the lower bound of the given range which indicates a lower depreciation rate.ย
Q9. What is the point where the economy reached steady state level of capital?
At point โ๐ดโit can be observed that the investment curve is steeper than the depreciation, so here investment is greater than the depreciation thus, if investment takes place it would enrich the capital stock which would lead to higher output.ย
Q10. What is the level of capital at the point โMโ?
The capital increases from the point โ๐ดโand moves toward point โ๐โ while in case of the point โ๐ตโ the depreciation is steeper than the depreciation.ย
Q11. What is the difference between the two plots?
The plots reveal that GA is extremely fast in maximizing the objective function and is better than traditional methods [18] because these involve calculation of mathematical differentiation of complex functions and is proved to be NP - Hard (exponential complexity)[17].ย
Q12. What is the solution generated by the proposed system?
The solution generated by the proposed system is a pair of values consisting ๐ฟ (depreciation rate) and ๐โ (amount of capital accumulated) with in the given range of search.ย