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Investment for patience in an endogenous growth model

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  • Kawagishi, Taketo

Abstract

This paper introduces time preference which depends on private investment for patience along the lines of Becker and Mulligan (1997) into a one-sector AK model. Assuming that time preference also hinges on the social level of such investment and that of consumption, we show that multiple balanced growth path (BGP henceforth) equilibria can exist, and provide the conditions for multiple BGP equilibria. Furthermore, we clarify that the equilibrium path is indeterminate in the high-growth BGP equilibrium, while it is determinate in the low-growth BGP equilibrium. We also discuss the effect of a subsidy policy to private investment for patience on an endogenous growth rate.

Suggested Citation

  • Kawagishi, Taketo, 2014. "Investment for patience in an endogenous growth model," Economic Modelling, Elsevier, vol. 42(C), pages 508-515.
  • Handle: RePEc:eee:ecmode:v:42:y:2014:i:c:p:508-515
    DOI: 10.1016/j.econmod.2014.02.005
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    References listed on IDEAS

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    Cited by:

    1. Haruyama, Tetsugen & Park, Hyun, 2017. "A simple dynastic economy with parental time investment in children’s patience," Economic Modelling, Elsevier, vol. 61(C), pages 235-247.

    More about this item

    Keywords

    One-sector AK model; Endogenous time preference; Multiple balanced growth path equilibria; Subsidy policy;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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