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Multiple BGPs in a Growth Model with Habit Persistence: A Comment

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  • PATRICK TOCHE

Abstract

Recently in this journal, Chen (2007) analyzes a model of an economy without distortions in which rational forward‐looking households care about how their current consumption compares with their own past consumption. Chen claims the existence of two saddle‐point stable balanced growth paths. In this comment, I show that the claim is incorrect. There is a unique saddle‐point stable balanced growth path and no global indeterminacy.

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  • Patrick Toche, 2009. "Multiple BGPs in a Growth Model with Habit Persistence: A Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(1), pages 189-195, February.
    • Handle: RePEc:wly:jmoncb:v:41:y:2009:i:1:p:189-195
    DOI: 10.1111/j.1538-4616.2008.00192.x
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    References listed on IDEAS

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    1. Iannaccone, Laurence R., 1986. "Addiction and satiation," Economics Letters, Elsevier, vol. 21(1), pages 95-99.
    2. Carroll, Christopher D & Overland, Jody & Weil, David N, 1997. "Comparison Utility in a Growth Model," Journal of Economic Growth, Springer, vol. 2(4), pages 339-367, December.
    3. Jody Overland & Christopher D. Carroll & David N. Weil, 2000. "Saving and Growth with Habit Formation," American Economic Review, American Economic Association, vol. 90(3), pages 341-355, June.
    4. Been-Lon Chen, 2007. "Multiple BGPs in a Growth Model with Habit Persistence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(1), pages 25-48, February.
    5. Patrick Toche, 2009. "Multiple BGPs in a Growth Model with Habit Persistence: A Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(1), pages 189-195, February.
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