On the controllability of continuous-time macroeconomic models

Summary (Abstract) It is argued in this paper that an independent control of target variables over time in continuous dynamic macroeconomic systems may not be achievable even though Aoki's well-known rank test for target path controllability is satisfied. It is shown that in many dynamical systems impulse controls are needed to steer the targets along arbitrarily given time paths. Such controls are not admissible from the macroeconomic point of view. By means of the structure algorithm by Silverman and Payne (1971) conditions for target path controllability that depend on the choice of the admissible spaces for the target and the instrument variables, are derived.The author is grateful to Professor Dr. Helmut Kuhn, Göttingen, and two anonymous referees for valuable comments on an earlier draft of this paper.