Dynamic efficiency is a term in economics, which refers to an economy that appropriately balances short run concerns (static efficiency) with concerns in the long run (focusing on encouraging research and development).
Dynamic efficiency in growth model
The Ramsey-Cass-Koopmans model does not have dynamic efficiency problems, but the Diamond Growth model is dynamically inefficient because of the overlapping generation setup; there is an allocation point which is better than the competitive equilibrium allocation point.
