Endogenous Growth and Consumption Aggregation

Nicole Tabasso

No 712, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: In this paper general CES consumption preferences are introduced into an endogenous growth model `a la Bernard, Eaton, Jensen, and Kortum (2003) and Eaton and Kortum (2001). This is in contrast to the more generally used assumption of logarithmic preferences. The paper shows that the CES preference structure does not alter the expected profits from engaging in R&D and therefore the growth path. This is proof that the analytically more convenient logarithmic preferences do not sacrifice generality. It is argued that the driving force behind this result is the common assumption of undirected research.

Keywords: CES Preferences; Endogenous Growth; Research (search for similar items in EconPapers)
JEL-codes: O30 O40 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2012-05
New Economics Papers: this item is included in nep-dge and nep-fdg
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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0712

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