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An Estimate of the Elasticity of Intertemporal Substitution in a Production Economy

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  • Taiji Harashima

    (tharashm@sk.tsukuba.ac.jp)

Abstract

The elasticity of intertemporal substitution (EIS) at the macro level has been estimated mostly based on endowment economy models and these estimates are very sensitive to the choice of interest rates that are used for estimation. Estimates based on production economy models do not need information on interest rates but require endogenous growth models that are free from both scale effects and the strong influence of population growth. Such a model is constructed and EIS is estimated without information on interest rates. The result indicates that EIS at the macro level is as low as 0.09.

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File URL: http://128.118.178.162/eps/mac/papers/0508/0508030.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Macroeconomics with number 0508030.

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Length: 26 pages
Date of creation: 31 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpma:0508030

Note: Type of Document - pdf; pages: 26
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Web page: http://128.118.178.162

Related research

Keywords: The elasticity of intertemporal substitution; The degree of relative risk aversion; Production economy; Endogenous growth model;

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References

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Cited by:
  1. Jakub Growiec, 2005. "Fertility Choice and Semi-Endogenous Growth: Where Becker Meets Jones," HEW 0503001, EconWPA, revised 17 Jan 2006.
  2. Alvis, Camilo & Castrillón, Cristian, 2011. "Tamaño óptimo del gasto público colombiano: una aproximación desde la teoría del crecimiento endógeno," BORRADORES DEPARTAMENTO DE ECONOMÍA 008986, UNIVERSIDAD DE ANTIOQUIA - CIE.

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