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Optimal Growth with Irreversible Investment in a Ramsey Model

Econometrica 1970 38(2), 331
[The Ramsey model of optimal capital accumulation is reconsidered under the additional restriction that gross investment must be nonnegative. An effective characterization of the optimal solution in open-loop form is obtained. It is shown, however, that in general no restriction can be placed on the number of intervals in which the non negativity constraint is binding.]