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An Estimate of the Elasticity of Intertemporal Substitution in a Production Economy

Author

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  • Taiji Harashima

    (tharashm@sk.tsukuba.ac.jp)

Abstract

The elasticity of intertemporal substitution (EIS) at the macro level has been estimated mostly based on endowment economy models and these estimates are very sensitive to the choice of interest rates that are used for estimation. Estimates based on production economy models do not need information on interest rates but require endogenous growth models that are free from both scale effects and the strong influence of population growth. Such a model is constructed and EIS is estimated without information on interest rates. The result indicates that EIS at the macro level is as low as 0.09.

Suggested Citation

  • Taiji Harashima, 2005. "An Estimate of the Elasticity of Intertemporal Substitution in a Production Economy," Macroeconomics 0508030, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0508030
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    References listed on IDEAS

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    Cited by:

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    2. Growiec Jakub, 2006. "Fertility Choice and Semi-Endogenous Growth: Where Becker Meets Jones," The B.E. Journal of Macroeconomics, De Gruyter, vol. 6(2), pages 1-25, September.
    3. Alberto Bucci & Massimo Florio & Davide La Torre, 2009. "Transitional Dynamics in a Growth Model with Government Spending, Technological Progress and Population Change," UNIMI - Research Papers in Economics, Business, and Statistics unimi-1082, Universitá degli Studi di Milano.

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    More about this item

    Keywords

    The elasticity of intertemporal substitution; The degree of relative risk aversion; Production economy; Endogenous growth model;
    All these keywords.

    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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