Growth dynamics in a model of endogenous time preference

Sarkar, Jayanta

doi:10.1016/j.iref.2005.12.005

Cited by 12 publications

(5 citation statements)

References 16 publications

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“…Literature on dynamic macroeconomic theory incorporates DMI for various purposes, such as to analyze growth dynamics in an overlapping generations model (e.g., Sarkar 2007) and in an AK model with borrowing constraints (e.g., Borissov 2013). It has helped investigate asset pricing in an overlapping generations model (e.g., Nath and Sarkar 2006) and to examine equilibrium indeterminacy in response to interest-rate rules (e.g., Chang et al 2011).…”

Section: Addendum: Related Studies 14mentioning

confidence: 99%

Behavioral Interactions, Markets, and Economic Dynamics

Ikeda¹,

Katô²,

Ohtake³

et al. 2016

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Section: Addendum: Related Studies 14mentioning

confidence: 99%

Behavioral Interactions, Markets, and Economic Dynamics

Ikeda¹,

Katô²,

Ohtake³

et al. 2016

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“…Over the last decades, a number of papers have relaxed the assumption of exogenous time preference. In particular, starting from Uzawa (1968), several studies have investigated the effects of individual consumption on the time preference rate; see Obstfeld (1981Obstfeld ( , 1990, Mendoza (1991), Shin and Epstein (1993), Palivos, Wang, and Zhang (1997), Drugeon (1996Drugeon ( , 1998Drugeon ( , 2000, Uribe (1997), Schmitt-Grohé (1998), Stern (2006), Sarkar (2007), Chen, Hsu, andLu (2008), andChakrabarty (2012). In turn, Epstein and Hynes (1983), Schmitt-Grohé and Uribe (2003), and Choi, Mark, and Sul (2008), among others, have endogenized the rate of time preference to aggregate consumption in variants of general equilibrium models.…”

Section: Related Literaturementioning

confidence: 99%

Optimal Fiscal Policy with Endogenous Time Preference

Dioikitopoulos

Kalyvitis

2015

Journal of Public Economic Theory

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This paper studies the role of Ramsey taxation under the assumption that the individual rate of time preference is determined by the publicly provided social level of education. We show how intertemporal complementarities of aggregate human capital can generate multiple equilibria and we examine the role of endogenous fiscal policies in equilibrium selection. Our analysis implies a lower optimal government size due to the effect of human capital on time preference.

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“…Becker and Mulligan (1997) is amongst the most notable papers in economic theory which model the correlation between education and discount rate. In growth models, endogenous discounting is modeled as a function of physical capital (Haaparanta & Puhakka, 2004), level of consumption (Sarkar, 2007), a generic theoretical construct of "future-oriented" capital (Stern, 2006), average propensity to consume (Zee, 1997), and individuals' own human capital (Bauer & Chytilov a, 2008).…”

Section: Introductionmentioning

confidence: 99%

Government size and economic growth in an endogenous growth model with rent‐seeking

Wadho

Ayaz

2017

Economics & Politics

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We explore the relationship between government size and economic growth in an endogenous growth model with human capital and an unproductive capital which facilitates rent‐seeking. With exogenous as well as endogenous time discounting, we find a non‐monotonic relationship between the size of government and economic growth. We find that with very high (low) discounting, there is a unique low (high) growth equilibrium, regardless of the size of government. For the intermediate range of discounting, there are multiple equilibria and the growth outcome depends on the size of government. With endogenous time discounting, the growth outcome is path dependent and depends on the level of inherited human capital. However, there is only one stable growth regime and the economy endogenously switches to it. When the institutional constraints on rent‐seeking are not extremely high, the stable regime is the one in which there is a high‐growth equilibrium for a smaller size of the government and for larger size, both the high‐growth and the low‐growth equilibrium coexist. When the institutional constraints on rent‐seeking are extremely high, there exists only a unique high‐growth equilibrium irrespective of the size of government. Furthermore, economies with bigger size of the government and/or with poor quality institutions will take longer to endogenously switch to this stable growth regime.

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Growth dynamics in a model of endogenous time preference

Cited by 12 publications

References 16 publications

Behavioral Interactions, Markets, and Economic Dynamics

Behavioral Interactions, Markets, and Economic Dynamics

Optimal Fiscal Policy with Endogenous Time Preference

Government size and economic growth in an endogenous growth model with rent‐seeking

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