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Endogenous time preference and infrastructure-led growth with an unexpected numerical example

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  • Kei Hosoya

    (Kokugakuin University)

Abstract

This paper shows the construction of a growth model that includes public infrastructure and a related externality and investigates the dynamic properties of the model for a specific endogenous time preference function. After suggesting a saddle-path stability for long-term equilibrium under an endogenous time preference, numerical analysis of the model then reveals an unexpected relation between the strength of the externality, the magnitude of the rate of time preference, and the growth rate of the economy. In addition, it is found that multiple equilibria are unlikely to be supported empirically by the model in this paper.

Suggested Citation

  • Kei Hosoya, 2024. "Endogenous time preference and infrastructure-led growth with an unexpected numerical example," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 23(1), pages 3-32, January.
    • Handle: RePEc:spr:portec:v:23:y:2024:i:1:d:10.1007_s10258-022-00230-1
    DOI: 10.1007/s10258-022-00230-1
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    More about this item

    Keywords

    Endogenous time preference; Public infrastructure; Capital-deepening externality; Numerical analysis;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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