Investment for Patience in an Endogenous Growth Model

Taketo Kawagishi ()
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Taketo Kawagishi: Kyoto University

No 814, KIER Working Papers from Kyoto University, Institute of Economic Research

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.

Keywords: One-sector AK model; Endogenous time preference; Multiple balanced growth path equilibria; Subsidy policy (search for similar items in EconPapers)
JEL-codes: E32 H23 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-env, nep-fdg and nep-mac
Date: 2012-04
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Persistent link: http://EconPapers.repec.org/RePEc:kyo:wpaper:814

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