IDEAS home Printed from https://ideas.repec.org/p/deg/conpap/c014_043.html
   My bibliography  Save this paper

Economic Growth in a Two-Agent Economy

Author

Listed:
  • Fernando Tohmé
  • Carlos Dabús

Abstract

This paper presents a two-agent economy, in which each agent has a consumption-dependent time preference. The optimal dynamic paths of accumulation will tend to one of many possible steady states, depending on the location of the initial capital level. One of the main results of this model arises in comparison with single-agent models. More precisely, one possible instance of the model consists of a case in which the two agents are such that without interaction one would become “rich” and the other “poor”. However, since they share a single production unit, a potential poverty trap may become averted.

Suggested Citation

  • Fernando Tohmé & Carlos Dabús, 2009. "Economic Growth in a Two-Agent Economy," DEGIT Conference Papers c014_043, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c014_043
    as

    Download full text from publisher

    File URL: http://degit.sam.sdu.dk/papers/degit_14/c014_043.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Iwai, Katsuhito, 1972. "Optimal economic growth and stationary ordinal utility --A fisherian approach," Journal of Economic Theory, Elsevier, vol. 5(1), pages 121-151, August.
    2. Rolf Mantel, 1995. "Why the rich get richer and the poor get poorer," Estudios de Economia, University of Chile, Department of Economics, vol. 22(2 Year 19), pages 177-205, December.
    3. Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(3), pages 729-758.
    4. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5, Elsevier.
    5. Rolf Mantel, 1995. "Why the Rich Get Richer and the Poor Get Poorer," Working Papers 9, Universidad de San Andres, Departamento de Economia, revised Mar 1995.
    6. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, December.
    7. Boud, John III, 1990. "Recursive utility and the Ramsey problem," Journal of Economic Theory, Elsevier, vol. 50(2), pages 326-345, April.
    8. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
    9. Michael Stern, 2006. "Endogenous time preference and optimal growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(1), pages 49-70, September.
    10. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    11. Harris, Christopher J, 1985. "Existence and Characterization of Perfect Equilibrium in Games of Perfect Information," Econometrica, Econometric Society, vol. 53(3), pages 613-628, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luis Alcalá & Fernando Tohmé & Carlos Dabús, 2019. "Strategic Growth with Recursive Preferences: Decreasing Marginal Impatience," Dynamic Games and Applications, Springer, vol. 9(2), pages 314-365, June.
    2. Erol, Selman & Le Van, Cuong & Saglam, Cagri, 2011. "Existence, optimality and dynamics of equilibria with endogenous time preference," Journal of Mathematical Economics, Elsevier, vol. 47(2), pages 170-179, March.
    3. Yasuhiro Nakamoto, 2009. "Consumption externalities with endogenous time preference," Journal of Economics, Springer, vol. 96(1), pages 41-62, January.
    4. Wei-Bin Zhang, 2016. "Population Growth And Preference Change In A Generalized Solow Growth Model With Gender Time Distributions," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 1(2), pages 7-30, September.
    5. Michal Bauer & Julie Chytilová, 2007. "Does Education Matter in Patience Formation? Evidence from Ugandan Villages," Working Papers IES 2007/10, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Feb 2007.
    6. Evangelos V. Dioikitopoulos & Sarantis Kalyvitis, 2015. "Optimal Fiscal Policy with Endogenous Time Preference," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(6), pages 848-873, December.
    7. Zhang Wei-Bin, 2013. "Habit Formation and Preference Change with Capital and Renewable Resources," Business Systems Research, Sciendo, vol. 4(2), pages 108-125, December.
    8. Camacho, Carmen & Saglam, Cagri & Turan, Agah, 2013. "Strategic interaction and dynamics under endogenous time preference," Journal of Mathematical Economics, Elsevier, vol. 49(4), pages 291-301.
    9. ZHANG, Wei-Bin, 2013. "Habit Formation And Preference Change In A Twosector Growth Model With Elastic Labor Supply," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(2), pages 3-20, May.
    10. Wei-Bin Zhang, 2013. "Dynamic Interactions among Growth, Environmental Change, Habit Formation, and Preference Change," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 3(1), pages 3-25, December.
    11. Sarkar, Jayanta, 2007. "Growth dynamics in a model of endogenous time preference," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 528-542.
    12. Wei-Bin ZHANG, 2012. "Habits, Saving Propensity, And Economic Growth," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(2), pages 3-15.
    13. Taketo Kawagishi & Kazuo Mino, 2012. "Time Preference and Long-Run Growth: the Role of Patience Capital," Economics Bulletin, AccessEcon, vol. 32(4), pages 3243-3249.
    14. Radwanski, Juliusz, 2020. "On the Purchasing Power of Money in an Exchange Economy," MPRA Paper 104244, University Library of Munich, Germany.
    15. Marieka M. Klawitter & C. Leigh Anderson & Mary Kay Gugerty, 2013. "Savings And Personal Discount Rates In A Matched Savings Program For Low-Income Families," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 468-485, July.
    16. Mattauch, Linus & Hepburn, Cameron & Stern, Nicholas, 2018. "Pigou pushes preferences: decarbonisation and endogenous values," INET Oxford Working Papers 2018-16, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    17. Elmendorf, Douglas W. & Gregory Mankiw, N., 1999. "Government debt," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 25, pages 1615-1669, Elsevier.
    18. Khwaja, Ahmed & Silverman, Dan & Sloan, Frank, 2007. "Time preference, time discounting, and smoking decisions," Journal of Health Economics, Elsevier, vol. 26(5), pages 927-949, September.
    19. Chavas, Jean-Paul, 2013. "On Demand Analysis and Dynamics: A Benefit Function Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149683, Agricultural and Applied Economics Association.
    20. Philip Oreopoulos & Kjell G. Salvanes, 2009. "How large are returns to schooling? Hint: Money isn't everything," NBER Working Papers 15339, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:deg:conpap:c014_043. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jan Pedersen (email available below). General contact details of provider: https://edirc.repec.org/data/iehhsdk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.