ENDOGENOUS EQUILIBRIUM GROWTH WITH RECURSIVE PREFERENCES AND INCREASING RETURNS

Hyun Park ()
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Hyun Park: Department of Economics, Kyung Hee University

Journal of Economic Development, 2008, vol. 33, issue 2, 167-188

Abstract: This paper studies the short-run and long-run behavior of a competitive economy in which both the discount factor and technological change are endogenously determined. In particular, the effect of saving behavior on persistent economic growth is considered. The paper provides the sufficient condition on the rate of impatience and the concavity of private technology for uniqueness and local stability of the steady state in the competitive economy. The condition implies determinacy of transitional equilibrium paths. However, the paper also shows that the presence of externalities and adjustment cost of investment can lead to indeterminacy of steady state equilibra.

Keywords: Recursive Preference; Increasing Returns; Indeterminacy; Local Stability (search for similar items in EconPapers)
JEL-codes: D51 D90 O41 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:33:y:2008:i:2:p:167-188

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