Arbeitspapier

Saving Rate Dynamics in the Neoclassical Growth Model: Hyperbolic Discounting and Observational Equivalence

The standard neoclassical growth model with Cobb-Douglas production predicts a monotonically declining saving rate, when reasonably calibrated. Ample empirical evidence, however, shows that the transition path of a country’s saving rate exhibits a rising or non-monotonic pattern. In important cases, hyperbolic discounting, which is empirically strongly supported, implies transitional dynamics of the saving rate that accords well with empirical evidence. This holds true even in a growth model with Cobb-Douglas production technology. We also identify the cases where hyperbolic discounting is observationally equivalent to exponential discounting. In those cases, hyperbolic discounting does not affect the saving rate dynamics. Numerical simulations employing a generalized class of hyperbolic discounting functions that we term regular discounting functions support the results.

Sprache
Englisch

Erschienen in
Series: Nota di Lavoro ; No. 42.2013

Klassifikation
Wirtschaft
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
Macroeconomics: Consumption; Saving; Wealth
Economic Growth and Aggregate Productivity: General
Thema
Saving Rate
Non-Monotonic Transition Path
Hyperbolic Discounting
Regular Discounting
Commitment
Short Planning Horizon
Neoclassical Growth Model

Ereignis
Geistige Schöpfung
(wer)
Farzin, Y. Hossein
Wendner, Ronald
Ereignis
Veröffentlichung
(wer)
Fondazione Eni Enrico Mattei (FEEM)
(wo)
Milano
(wann)
2013

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Farzin, Y. Hossein
  • Wendner, Ronald
  • Fondazione Eni Enrico Mattei (FEEM)

Entstanden

  • 2013

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