Effects of wariness on economic growth in overlapping generations models
Year: 2024
Type: article
Abstract: We introduce the notion of wariness, defined as a concern for the lowest lifetime utility, in overlapping generations models and explore its effects on economic growth. In an exogenous growth model, under standard assumptions, we prove that the capital stock converges to a steady state . We then explore conditions under which this steady state is increasing (or decreasing) in the wariness level. We also provide a necessary and sufficient condition for the dynamic efficiency of the intertemporal equilibrium. In endogenous growth models (à la Romer (1986) or à la Barro (1990)), we show that the growth rate of capital stock per capita in the economy with wariness is lower (higher, respectively) than that in the economy without wariness if and only if the capital return is high (low, respectively).
Authors: Hai Ha Pham, Ngoc-Sang Pham
Language: English
Topic: Economic theories and models
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $2,630
OpenAlex ID: W4391801289