Jerome L. Stein, Keizo Nagatani; Stabilization Policies in a Growing Economy1, The Review of Economic Studies, Volume 36, Issue 2, 1 April 1969, Pages 165–

Ettore F. Infante, Jerome L. Stein; Optimal Growth with Robust Feedback Control12, The Review of Economic Studies, Volume 40, Issue 1, 1 January 1973, Page

We use stochastic optimal control-dynamic programming (DP) to derive the optimal debt/net worth, consumption/net worth, current account/net worth, and endogenous growth rate in an economy – which could be a country, region or sector within a country. Unlike the literature that uses an intertemporal budget constraint or the Maximum Principle, the DP approach does not require perfect foresight or certainty equivalence. Our results are generalizations of the Merton model, and are explained graphically within a mean–variance context. Two examples are provided to illustrate the usefulness of our technique in predicting debt crises.

The Council's Report provides a look at the 1969-71 game plan to disinflate by means of retarding aggregate demand.... The President-Elect's Task Force on Inflation recommended, as a first interim step, that aggregate demand be slowed so as to bring the unemployment rate back to some equilibrium region around 4.5 percent.... What happened was that, under the cover of the expectation and acceptance of such a limited step towards re-equilibration, the Administration gradually tightened monetary and fiscal policy so severely as 'gradually' to send the unemployment rate whizzing past the equilibrium zone to around 6 percent. To my knowledge the theory of how, and how well, this medicine would act to cure the patient of his inflation was never spelled out by the Council of Economic Advisers. [pp. 533--34]