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Endogenous discounting via wealth, twin-peaks and the role of technology

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  • Schumacher, Ingmar

Abstract

We endogenize the discount rate via wealth and provide evidence that wealth affects the discount rate negatively. We give a necessary and sufficient condition for endogenous discounting to lead to the Twin-peaks of economic growth and show that improvements in technology help avoid them.

Suggested Citation

  • Schumacher, Ingmar, 2009. "Endogenous discounting via wealth, twin-peaks and the role of technology," Economics Letters, Elsevier, vol. 103(2), pages 78-80, May.
    • Handle: RePEc:eee:ecolet:v:103:y:2009:i:2:p:78-80
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    Cited by:

    1. 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.
    2. Schumacher, Ingmar, 2015. "The endogenous formation of an environmental culture," European Economic Review, Elsevier, vol. 76(C), pages 200-221.
    3. Can Askan Mavi, 2016. "Uncertain Catastrophic Events : Another Source of Environmental Traps ?," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01275174, HAL.
    4. Strulik, Holger, 2012. "Patience and prosperity," Journal of Economic Theory, Elsevier, vol. 147(1), pages 336-352.
    5. Evangelos V. Dioikitopoulos & Sugata Ghosh & Eugenia Vella, 2016. "Technological Progress, Time Perception and Environmental Sustainability," Working Papers 2016002, The University of Sheffield, Department of Economics.
    6. repec:ipg:wpaper:13 is not listed on IDEAS
    7. Strulik, Holger, 2015. "Hyperbolic discounting and endogenous growth," Economics Letters, Elsevier, vol. 126(C), pages 131-134.
    8. Strulik, Holger, 2016. "Myopic misery: Maternal depression, child investments, and the neurobiological poverty trap," Center for European, Governance and Economic Development Research Discussion Papers 294, University of Goettingen, Department of Economics.
    9. Schumacher, Ingmar, 2011. "Endogenous discounting and the domain of the felicity function," Economic Modelling, Elsevier, vol. 28(1-2), pages 574-581, January.
    10. Xu, Wenli & Xu, Kun & Lu, Hongyou, 2016. "Environmental Policy and China’s Macroeconomic Dynamics Under Uncertainty---Based on The NK Model with Distortionary Taxation," MPRA Paper 71314, University Library of Munich, Germany.
    11. Sebastian Vollmer & Hajo Holzmann & Florian Schwaiger, 2013. "Peak vs Components," Review of Development Economics, Wiley Blackwell, vol. 17(2), pages 352-364, May.
    12. Borissov, Kirill, 2013. "Growth and distribution in a model with endogenous time preferences and borrowing constraints," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 117-128.
    13. Can Askan Mavi, 2016. "Uncertain Catastrophic Events : Another Source of Environmental Traps ?," Working Papers halshs-01275174, HAL.
    14. Six, M. & Wirl, F., 2015. "Optimal pollution management when discount rates are endogenous," Resource and Energy Economics, Elsevier, vol. 42(C), pages 53-70.
    15. Ken-Ichi Hirose & Shinsuke Ikeda, 2015. "Decreasing Marginal Impatience and Capital Accumulation in a Two-Country World Economy," Metroeconomica, Wiley Blackwell, vol. 66(3), pages 474-507, July.
    16. Kawagishi, Taketo, 2014. "Investment for patience in an endogenous growth model," Economic Modelling, Elsevier, vol. 42(C), pages 508-515.
    17. Ingmar, SCHUMACHER, 2006. "On optimality, endogeneous discounting and wealth accumulation," Discussion Papers (ECON - Département des Sciences Economiques) 2006058, Université catholique de Louvain, Département des Sciences Economiques.
    18. Strulik, Holger, 2016. "Limited self-control and long-run growth," Mathematical Social Sciences, Elsevier, vol. 83(C), pages 1-8.
    19. repec:eee:mateco:v:73:y:2017:i:c:p:34-43 is not listed on IDEAS
    20. Kirill Borissov, 2013. "The Existence of Equilibrium Paths in an AK-model with Endogenous Time Preferences and Borrowing Constraints," EUSP Department of Economics Working Paper Series Ec-01/13, European University at St. Petersburg, Department of Economics.
    21. Can Askan Mavi, 2017. "Can a hazardous event be another source of poverty traps ?," Working Papers 2017.14, FAERE - French Association of Environmental and Resource Economists.
    22. Yanase, Akihiko, 2011. "Impatience, pollution, and indeterminacy," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1789-1799, October.
    23. repec:ipg:wpaper:2013-013 is not listed on IDEAS

    More about this item

    Keywords

    Endogenous discounting Twin-peaks of economic growth Multiple equilibria;

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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