Existence, Optimality and Dynamics of Equilibria with Endogenous Time Preference

Cuong Le van, Çağrı Sağlam and Selman Erol
Additional contact information
Selman Erol: Bilkent University [Ankara]

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: To account for the development patterns that differ considerably among economies in the long run, a variety of one-sector models that incorporate some degree of market imperfections based on technological external effects and increasing returns have been presented. This paper studies the dynamic implications of, yet another mechanism, the endogenous rate of time preference depending on the stock of capital, in a one-sector growth model. The planner's problem is presented and the optimal paths are characterized. We show that development or poverty traps can arise even under a strictly convex technology. We also show that even under a convex-concave technology, the optimal path can exhibit global convergence to a unique stationary point. The multipliers system associated with an optimal path is proven to be the supporting price system of a competitive equilibrium under externality and detailed results concerning the properties of optimal (equilibrium) paths are provided. We show that the model exhibits globally monotone capital sequences yielding a richer set of potential dynamics than the classic model with exogenous discounting.

Keywords: Endogenous time preference; Optimal growth; Competitive equilibrium; Multiple steady-states (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-dge
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00639731v1
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published in Journal of Mathematical Economics, 2011, 47 (2), pp.170-179

Downloads: (external link)
https://shs.hal.science/halshs-00639731v1/document (application/pdf)

Related works:
Journal Article: Existence, optimality and dynamics of equilibria with endogenous time preference (2011)
Working Paper: Existence, Optimality and Dynamics of Equilibria with Endogenous Time Preference (2011)
Working Paper: Existence, Optimality and Dynamics of Equilibria with Endogenous Time Preference (2011)
Working Paper: Existence, Optimality and Dynamics of Equilibria with Endogenous Time Preference (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:cesptp:halshs-00639731

Access Statistics for this paper

More papers in Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL
Bibliographic data for series maintained by CCSD ().