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[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.]

This paper is a sequel to On the Stability of the Competitive Equilibrium, I, by K. J. Arrow and L. Hurwicz. It extends the results of I in several directions. In particular, it provides a proof of stability in the large (and not merely locally) when all goods are gross substitutes; this result is found to be valid for processes where the price adjustment rate is a continuous sign-preserving, but not necessarily proportionate, function of excess demand. The paper deals both with systems where one of the commodities plays the role of numeraire and with systems where all commodities are treated symmetrically.