Journal Article Lemmas for a Theory of Approximate Optimal Growth Get access C. C. von Weizsäcker C. C. von Weizsäcker University of Heidelberg Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 34, Issue 1, January 1967, Pages 143–151, https://doi.org/10.2307/2296575 Published: 01 January 1967

Robert C. Meier, The Application of Optimum-Seeking Techniques to Simulation Studies: A Preliminary Evaluation, The Journal of Financial and Quantitative Analysis, Vol. 2, No. 1 (Mar., 1967), pp. 31-51

Most businesses sell on credit. To administer credit, such companies set credit granting, term, and collection policies. This article analyzes one aspect of credit granting policy: the determination of the optimal number of credit applicants that should be accepted by a creditor. The emphasis in the relevant literature traditionally has been on techniques for estimating a credit applicant's probability of default and, to a lesser degree, on the decision to accept an applicant given his estimated probability of default. Cumulatively, these two decisions are crucial to any business selling on credit.

I. A general formulation of the model, 59. — II. The choice of dependent variables, 61. — III. The capital investment equation, 64. — IV. The R & D equation, 71. — V. The advertising equation, 74. — VI. The dividends equation, 75. — VII. An appraisal of the model, 77. — VIII. Policy implications of the results, 81. — IX. Conclusion, 84. — Appendix, 84.

The poverty model, 40. — Farmers, 43. — Families with no one in the labor force, 44. — Education, 46. — Alaska and Hawaii, 47. — Full-time employment, 47. — Industrial structure, 48. — Nonwhites, 51. — Principal component analysis, 52. — Implications, 56.

I. Introduction, 140. — II. Application, 142. — III. Conclusion, 145.

This paper surveys the results of mostly recent research on optimal aggregate economic growth models, and comments on the difficulties encountered and on desirable directions of further research.

A theoretical model capable of supporting a rigorous analysis of portfolio selection in financial intermediaries appeared only recently. In the absence of a suitable theoretical framework, the limitations of maximizing behavior as an explanation of the selection of asset and liability structures in this class of firms were obscured. Discussions bearing on this question usually focused on the structure of one or the other side of intermediary balance sheets and gave little attention to the effects of these structures on the risk associated with their equity.