∂L λT> 0, |
λt > 0, |
λ∂L |
=0 |
∂L ∂μt > , |
μt > 0, |
∂L μt^τ~ |
=0 |
dL > 0 ■ ∂δt |
δt > 0, |
∂L |
=0 |
ktg-σ1 |
=0 |
(19) |
Equation (16) is the Kuhn-Tucker first-order condition with respect to τt, equation (17)
is the Kuhn-Tucker first-order condition with respect to qt and equation (18) is the first-
order condition with respect to kt+1 . Equation (19) is the transversality condition stating
that the actual value of the capital in terms of welfare is exhausted.
2.3.3 Dictatorship’s equilibrium
Given initial condition {k0}, a dictatorship’s equilibrium can be characterized by a path
{kt+1 ,τt,qt,λt,μt}t>0 such that equations (13)-(18) hold.
3 Dictatorship and economic development
In this section, we want to know whether all types of dictatorship regardless of political
constraints are economically feasible. Therefore, we do not take the insurrection constraint
(13) into account, i.e., we set μ = 0 in equations (16) to (18). We thus study the existence
19