Economic Growth in a Two-Agent Economy
This paper presents a two-agent economy, in which each agent has a consumption-dependent time preference. The optimal dynamic paths of accumulation will tend to one of many possible steady states, depending on the location of the initial capital level. One of the main results of this model arises in comparison with single-agent models. More precisely, one possible instance of the model consists of a case in which the two agents are such that without interaction one would become “rich” and the other “poor”. However, since they share a single production unit, a potential poverty trap may become averted.
|Date of creation:||Jun 2009|
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- Michael Stern, 2006. "Endogenous time preference and optimal growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(1), pages 49-70, September.
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- Rolf Mantel, 1995. "Why the Rich Get Richer and the Poor Get Poorer," Working Papers 9, Universidad de San Andres, Departamento de Economia, revised Mar 1995.
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