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Growth and distribution in a model with endogenous time preferences and borrowing constraints

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  • Borissov, Kirill

Abstract

This paper proposes an AK-model with endogenous time preferences and borrowing constraints. It is assumed that the subjective discount factor of a household is an increasing function of its relative income. First, we describe the structure of balanced-growth equilibrium paths, on which the population splits into two groups: the rich and the poor. Secondly, we study sliding equilibrium paths, show that they become balanced from some time onwards and that eventually all the capital is owned by those households that were the richest at the initial state. It follows that the long-run rate of growth depends on the initial distribution of wealth and income.

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  • Borissov, Kirill, 2013. "Growth and distribution in a model with endogenous time preferences and borrowing constraints," Mathematical Social Sciences, Elsevier, vol. 66(2), pages 117-128.
    • Handle: RePEc:eee:matsoc:v:66:y:2013:i:2:p:117-128
    DOI: 10.1016/j.mathsocsci.2013.03.003
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    Cited by:

    1. Borissov, Kirill & Hashimzade, Nigar, 2022. "Fiscal policy and inequality in a model with endogenous positional concerns," Journal of Mathematical Economics, Elsevier, vol. 103(C).
    2. Ken-Ichi Hirose & Shinsuke Ikeda, 2015. "Decreasing Marginal Impatience and Capital Accumulation in a Two-Country World Economy," Metroeconomica, Wiley Blackwell, vol. 66(3), pages 474-507, July.
    3. Kirill Borissov & Mikhail Pakhnin & Ronald Wendner, 2020. "Naive Agents with Quasi-hyperbolic Discounting and Perfect Foresight," EUSP Department of Economics Working Paper Series 2020/03, European University at St. Petersburg, Department of Economics.
    4. Kirill Borissov & Mikhail Pakhnin & Ronald Wendner, 2024. "Present-Biased Envy, Inequality, and Growth," CESifo Working Paper Series 11090, CESifo.
    5. Borissov, Kirill & Pakhnin, Mikhail & Wendner, Ronald, 2021. "The Neoclassical Growth Model with Time-Inconsistent Decision Making and Perfect Foresight," MPRA Paper 108336, University Library of Munich, Germany.
    6. Borissov, Kirill & Pakhnin, Mikhail & Wendner, Ronald, 2024. "General equilibrium and dynamic inconsistency," Journal of Mathematical Economics, Elsevier, vol. 114(C).
    7. Borissov, K. & Pakhnin, M., 2018. "A Division of Society into the Rich and the Poor: Some Approaches to Modeling," Journal of the New Economic Association, New Economic Association, vol. 40(4), pages 32-59.
    8. Borissov, Kirill, 2016. "The Rich And The Poor In A Simple Model Of Growth And Distribution," Macroeconomic Dynamics, Cambridge University Press, vol. 20(7), pages 1934-1952, October.

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    JEL classification:

    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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