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Habit formation and multiplicity of balanced growth path: a comment

Author

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  • Ryoji Hiraguchi

    (Stanford University, Department of Economics)

Abstract

Chen (Journal of Money, Credit and Banking [2007] 25-48) studies the AK model where the utility function includes multiplicative habits in consumption and argues that the model has multiple balanced growth paths with different growth rates. However, one of his calculations is incorrect. I show that in his model, the optimal growth rate is uniquely determined.

Suggested Citation

  • Ryoji Hiraguchi, 2007. "Habit formation and multiplicity of balanced growth path: a comment," Economics Bulletin, AccessEcon, vol. 14(3), pages 1-4.
    • Handle: RePEc:ebl:ecbull:eb-07n10002
    as

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    References listed on IDEAS

    as
    1. Jody Overland & Christopher D. Carroll & David N. Weil, 2000. "Saving and Growth with Habit Formation," American Economic Review, American Economic Association, vol. 90(3), pages 341-355, June.
    2. Been-Lon Chen, 2007. "Multiple BGPs in a Growth Model with Habit Persistence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 39(1), pages 25-48, February.
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    More about this item

    Keywords

    balanced growth path;

    JEL classification:

    • N1 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations

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