Endogenous Discount Rate and Elasticity of the Marginal Utility of Consumption
Giuseppe Di Vita
University of Catania - Faculty of Law
May 30, 2011
Applied Economics Letters, 2012, 19(7):665-669
Using an endogenous growth model where the discount rate is a function of consumption, we show that the condition in which the elasticity of the marginal utility of consumption is greater than one ensures, at the same time, the existence of an unique saddle point equilibrium and the maximization of capital and consumption.
Keywords: elasticity of the marginal utility of consumption, endogenous discount rate, growth model, saddle point equilibrium
JEL Classification: C62, D9, E13Accepted Paper Series
Date posted: June 1, 2011 ; Last revised: December 24, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo6 in 0.343 seconds