Time preference and cyclical endogenous growth

Orlando Gomes

MPRA Paper from University Library of Munich, Germany

Abstract: The paper develops an AK endogenous growth model with an endogenously determined rate of intertemporal preference. Following some of the related literature, we assume that the degree of impatience that is revealed by the representative agent, regarding future consumption, depends on income. To be precise, the proposed framework establishes a link between the output gap and the discount rate attached to the sequence of future utility functions. We analyze both local and global dynamics. From a local analysis point of view, a variety of stability results is possible to obtain, depending on parameter values. The study of global dynamics allows to find endogenous business cycles under some reasonable circumstances. On a second stage, the model is extended to include the role of leisure.

Keywords: Time preference; Endogenous growth; Endogenous fluctuations; Quasiperiodic orbits (search for similar items in EconPapers)
JEL-codes: C61 E32 O41 (search for similar items in EconPapers)
Date: 2007-05
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:3282

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