Habit formation and multiplicity of balanced growth path: a comment

Ryoji Hiraguchi ()

Economics Bulletin, 2007, vol. 14, issue 3, 1-4

Abstract: Chen (Journal of Money, Credit and Banking [2007] 25-48) studies the AK model where the utility function includes multiplicative habits in consumption and argues that the model has multiple balanced growth paths with different growth rates. However, one of his calculations is incorrect. I show that in his model, the optimal growth rate is uniquely determined.

Keywords: balanced; growth; path (search for similar items in EconPapers)
JEL-codes: N1 (search for similar items in EconPapers)
Date: 2007-10-09
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