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Endogenous Growth and Consumption Aggregation

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  • Nicole Tabasso

    (University of Surrey)

Abstract

In this paper general CES consumption preferences are introduced into an endogenous growth model `a la Bernard, Eaton, Jensen, and Kortum (2003) and Eaton and Kortum (2001). This is in contrast to the more generally used assumption of logarithmic preferences. The paper shows that the CES preference structure does not alter the expected profits from engaging in R&D and therefore the growth path. This is proof that the analytically more convenient logarithmic preferences do not sacrifice generality. It is argued that the driving force behind this result is the common assumption of undirected research.

Suggested Citation

  • Nicole Tabasso, 2012. "Endogenous Growth and Consumption Aggregation," School of Economics Discussion Papers 0712, School of Economics, University of Surrey.
    • Handle: RePEc:sur:surrec:0712
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    File URL: https://repec.som.surrey.ac.uk/2012/DP07-12.pdf
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    References listed on IDEAS

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    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 43-61.
    3. Andrew B. Bernard & Jonathan Eaton & J. Bradford Jensen & Samuel Kortum, 2003. "Plants and Productivity in International Trade," American Economic Review, American Economic Association, vol. 93(4), pages 1268-1290, September.
    4. Samuel S. Kortum, 1997. "Research, Patenting, and Technological Change," Econometrica, Econometric Society, vol. 65(6), pages 1389-1420, November.
    5. Jonathan Eaton & Samuel Kortum, 2002. "Technology, Geography, and Trade," Econometrica, Econometric Society, vol. 70(5), pages 1741-1779, September.
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    Keywords

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    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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