A BEJM Contributions article.

Abstract

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.

Submitted: May 5, 2003 · Accepted: July 9, 2003 · Published: November 19, 2003

Originally published in Contributions to Macroeconomics.

Recommended Citation

Ferraguto, Giuseppe and Pagano, Patrizio (2003) "Endogenous Growth with Intertemporally Dependent Preferences," Contributions to Macroeconomics: Vol. 3 : Iss. 1, Article 10.
Available at: http://www.bepress.com/bejm/contributions/vol3/iss1/art10