Endogenous time preference with externalities and equilibrium indeterminacy
نویسنده
چکیده
This paper assumes that a subjective discount factor is affected by an average level of investment in future-oriented resources in an economy (investment externalities) in addition to a level of individual investment in future-oriented resources. Under this assumption, this paper considers a maximization problem formulated as a pseudo planning problem and shows the conditions under which equilibrium indeterminacy arises. The results of this paper are compared to those of an existing model with a subjective discount factor which does not depend on investment externalities. JEL classification: E32; H23; O40
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