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

  • Taiji Harashima

    (tharashm@sk.tsukuba.ac.jp)

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.

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File URL: http://econwpa.repec.org/eps/mac/papers/0508/0508030.pdf
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Paper provided by EconWPA in its series Macroeconomics with number 0508030.

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Length: 26 pages
Date of creation: 31 Aug 2005
Date of revision:
Handle: RePEc:wpa:wuwpma:0508030
Note: Type of Document - pdf; pages: 26
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Hall, Robert E, 1988. "Intertemporal Substitution in Consumption," Journal of Political Economy, University of Chicago Press, vol. 96(2), pages 339-57, April.
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