Effects of wariness on economic growth in overlapping generations models

Hai Ha Pham and Ngoc-Sang Pham

Journal of Mathematical Economics, 2024, vol. 115, issue C

Abstract: We introduce the notion of wariness, defined as a concern for the lowest lifetime utility, in overlapping generations models and explore its effects on economic growth. In an exogenous growth model, under standard assumptions, we prove that the capital stock converges to a steady state. We then explore conditions under which this steady state is increasing (or decreasing) in the wariness level. We also provide a necessary and sufficient condition for the dynamic efficiency of the intertemporal equilibrium. In endogenous growth models (à la Romer (1986) or à la Barro (1990)), we show that the growth rate of capital stock per capita in the economy with wariness is lower (higher, respectively) than that in the economy without wariness if and only if the capital return is high (low, respectively).

Keywords: Wariness; Overlapping generations; Dynamic efficiency; Economic growth; Endogenous growth (search for similar items in EconPapers)
JEL-codes: D14 D5 E71 O41 (search for similar items in EconPapers)
Date: 2024
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Related works:
Working Paper: Effects of wariness on economic growth in overlapping generations models (2024)
Working Paper: Effects of Wariness on Economic Growth in Overlapping Generations Models (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:115:y:2024:i:c:s0304406824001204

DOI: 10.1016/j.jmateco.2024.103060

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