Shape-preserving computation in economic growth models

We point out the shape characteristics - monotonicity and concavity - of th e value functions of optimal economic growth problems. We introduce the con cept of shape preservation in approximating the value functions. We also pr esent a shape-preserving algorithm to compute the solutions of continuous-s tate optimal economic growth problems. Numerical results show that shape-pr eserving interpolation methods are superior to others with less-sophisticat ed interpolation in the sense of smaller approximation errors. (C) 2001 Els evier Science Ltd. All rights reserved.