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Endogenous Growth with Intertemporally Dependent Preferences
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Giuseppe Ferraguto
Published/Copyright:
November 19, 2003
This paper presents an endogenous growth model with intertemporally dependent preferences and "Ak" technology. We derive sufficient conditions for a balanced growth path to be an equilibrium, provide a full characterization of the equilibrium dynamics of the economy, and explore the implications of habit formation for the patterns of cross-country growth and convergence. Finally, we show that the alternative departure from the standard assumption of isoelastic preferences represented by the use of a Stone-Geary utility function can be interpreted as a special case of the model with habit formation. Our results highlight the importance of preferences in the dynamics of growth, a point neglected in most of the literature.
Published Online: 2003-11-19
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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