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On impatience, temptation and Ramsey’s conjecture

Author

Listed:
  • Jean-Pierre Drugeon

    () (Paris School of Economics
    Centre National de la Recherche Scientifique)

  • Bertrand Wigniolle

    () (Paris School of Economics
    Maison des Sciences Economiques)

Abstract

Abstract This article explores the implications of the introduction of self-control costs and temptation motives in intertemporal preferences in an elementary competitive equilibrium. We let heterogeneous agents differ in both their discount parameters and their temptation motives, and the degree of financial-market imperfections vary, and establish their implications for the long-run value of the capital stock and the underlying long-run distribution of consumption and wealth. The results differ from those obtained in a standard Ramsey benchmark model, in that long-run distributions are commonly non-degenerate.

Suggested Citation

  • Jean-Pierre Drugeon & Bertrand Wigniolle, 2017. "On impatience, temptation and Ramsey’s conjecture," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(1), pages 73-98, January.
  • Handle: RePEc:spr:joecth:v:63:y:2017:i:1:d:10.1007_s00199-015-0933-4
    DOI: 10.1007/s00199-015-0933-4
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    References listed on IDEAS

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    1. Robert Becker & Ram Dubey & Tapan Mitra, 2014. "On Ramsey equilibrium: capital ownership pattern and inefficiency," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(3), pages 565-600, April.
    2. Zou, Heng-fu, 1994. "'The spirit of capitalism' and long-run growth," European Journal of Political Economy, Elsevier, vol. 10(2), pages 279-293, July.
    3. Robert Becker & Ram Dubey & Tapan Mitra, 2014. "On Ramsey equilibrium: capital ownership pattern and inefficiency," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(3), pages 565-600, April.
    4. Cuong Le Van & Yiannis Vailakis, 2003. "Existence of a competitive equilibrium in a one sector growth model with heterogeneous agents and irreversible investment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 22(4), pages 743-771, November.
    5. Drugeon, Jean-Pierre & Wigniolle, Bertrand, 2016. "On time-consistent policy rules for heterogeneous discounting programs," Journal of Mathematical Economics, Elsevier, vol. 63(C), pages 174-187.
    6. Bewley, Truman, 1982. "An integration of equilibrium theory and turnpike theory," Journal of Mathematical Economics, Elsevier, vol. 10(2-3), pages 233-267, September.
    7. Jean-Pierre Drugeon & Bertrand Wigniolle, 2015. "On Time-Consistent Policy Rules for Heterogeneous Discounting Programs," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-01243669, HAL.
    8. Faruk Gul & Wolfgang Pesendorfer, 2004. "Self-Control and the Theory of Consumption," Econometrica, Econometric Society, vol. 72(1), pages 119-158, January.
    9. Sorger, Gerhard, 1994. "On the Structure of Ramsey Equilibrium: Cycles, Indeterminacy, and Sunspots," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(5), pages 745-764, August.
    10. Becker, Robert A & Foias, Ciprian, 1994. "The Local Bifurcation of Ramsey Equilibrium," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(5), pages 719-744, August.
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    Cited by:

    1. repec:ebl:ecbull:eb-17-00806 is not listed on IDEAS
    2. repec:spr:dyngam:v:9:y:2019:i:2:d:10.1007_s13235-018-0269-3 is not listed on IDEAS
    3. 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.

    More about this item

    Keywords

    Impatience; Temptation; Self-Control; Ramsey’s Conjecture;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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