A Simple Proof of the Necessity of the Transversality Condition.

This note provides a simple proof of the necessity of the transversality condition for the differentiable reduced-form model. The proof uses only an elementary perturbation argument without relying on dynamic programming. The proof makes it clear that, contrary to common belief, the necessity of the transversality condition can be shown in a straightforward way.

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Year of publication:	2001
Authors:	Kamihigashi, T.
Subject:	PROGRAMMING \| DYNAMIC OPTIMIZATION \| MODELS

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Type of publication:	Book / Working Paper
Notes:	6 pages
Classification:	C61 - Optimization Techniques; Programming Models; Dynamic Analysis ; D90 - Intertemporal Choice and Growth. General ; G12 - Asset Pricing
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005781008