Efficient Intertemporal Allocation, Consumption-Value Maximization and Capital-Value Transversality: A Unified View

In recent years, based on Malinvaud's seminal work, there have been a number of important contributions towards resolving the following fundamental question: What observable properties characterize some (all) competitive price system(s) associated with an efficient growth path? The natural focus in efforts to answer this question has been on the dynamical behavior of capital-value--"natural" in the sense that Malinvaud's theorem establishes that, under very general conditions, efficient growth is tantamount to the existence of an associated competitive price system with the special property that, in every period, capital-value is minimized among all potential growth paths yielding the same stream of consumption goods thereafter. In other words, dealing with the question eventually reduces to looking for a more concrete version of Malinvaud's capital-value minimization condition.