Seminario 15/17: M. P. Martínez-García (U. Murcia) – Non-constant discounting and Ak-type growth models

This paper analyzes an Ak-type endogenous growth model under non-constant discounting, assuming both naïve and sophisticated consumers. For both types of consumers an isoelastic utility with an intertemporal elasticity below one guarantees observational equivalence under exponential and non-constant discounting, but rejects strong equivalence (identical overall impatience does not lead to identical growth rates). Further, polices aimed at increasing productivity of the economy are less growth enhancing than typically predicted by the literature with exponential discounting.