Endogenous Time Preference and Endogenous Growth

January 1, 1994

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Format: Chicago

Howell H Zee. Endogenous Time Preference and Endogenous Growth, (USA: International Monetary Fund, 1994) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The present paper develops a one-sector aggregate endogenous growth model with intertemporal preference dependence. The resultant model possesses the fundamental property of growth convergence, in the sense that countries with identical parameters regarding technology, preference, and government policy will converge to a steady state with the same (positive) growth rate. A notable tax policy implication of the model is that, even in the absence of externalities, the growth effects of an income tax are shown to be a priori ambiguous and dependent on the relative magnitudes of the tax rate and the tax elasticity of the savings rate.

Subject: Consumption, Consumption taxes, Human capital, Income tax systems, Labor, National accounts, Taxes

Keywords: Consumption, Consumption rate, Consumption taxes, Human capital, Income tax systems, Product, Rate of consumption, Steady-state growth, Steady-state rate, Time preference, WP

Publication Details

Pages:

28
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1994/015
Stock No:

WPIEA0151994
ISBN:

9781451843194
ISSN:

1018-5941

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