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Investment for Patience in an Endogenous Growth Model

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  • Taketo Kawagishi

    (Kyoto University)

Abstract

This paper explores a one-sector AK model in which time preference depends on private investment in future-oriented resources along the lines of Becker and Mulligan (1997). Assuming that time preference is also affected by the social level of such investment and that of consumption, we show that multiple balanced growth path (BGP henceforth) equilibria can exist, and provide the conditions for multiple BGP equilibria. Furthermore, we clarify that the equilibrium path is indeterminate in the high-growth BGP equilibrium, while it is determinate in the low-growth BGP equilibrium. We also discuss the effect of a subsidy policy to private investment in future-oriented resources on an endogenous growth rate.

Suggested Citation

  • Taketo Kawagishi, 2012. "Investment for Patience in an Endogenous Growth Model," KIER Working Papers 814, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:814
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    One-sector AK model; Endogenous time preference; Multiple balanced growth path equilibria; Subsidy policy;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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