Endogenous Time Preference and Endogenous Growth

Howell Zee

No 1994/015, IMF Working Papers from International Monetary Fund

Abstract: The present paper develops a one-sector aggregate endogenous growth model with intertemporal preference dependence. The resultant model possesses the fundamental property of growth convergence, in the sense that countries with identical parameters regarding technology, preference, and government policy will converge to a steady state with the same (positive) growth rate. A notable tax policy implication of the model is that, even in the absence of externalities, the growth effects of an income tax are shown to be a priori ambiguous and dependent on the relative magnitudes of the tax rate and the tax elasticity of the savings rate.

Keywords: WP; product; consumption rate; time preference; rate of consumption; steady-state rate; steady-state growth; Income tax systems; Consumption; Consumption taxes; Human capital (search for similar items in EconPapers)
Pages: 28
Date: 1994-01-01
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Citations: View citations in EconPapers (3)

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Journal Article: Endogenous Time Preference and Endogenous Growth (1997)
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