Endogenous discount rate and elasticity of the marginal utility of consumption
Using an endogenous growth model where the discount rate is a function of consumption, we show that the condition in which the elasticity of the marginal utility of consumption is greater than 1 ensures, at the same time, the existence of an unique saddle point equilibrium and the maximization of capital and consumption.
Volume (Year): 19 (2012)
Issue (Month): 7 (May)
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