**Definition:**The transversality condition limits solutions to an infinite period dynamic optimization problem. Intuitively, it rules out those that involve accumulating, for example, infinite debt.

The transversality condition (TC) can be obtained by considering a finite,
T-period horizon version of the problem of maximizing present value, obtaining
the first-order condition for n_{t+T}, and then taking the limit of
this condition as T goes to infinity.

The form is often:

(TC) lim b^{T}.... = 0

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