DYNAMICS OF THE SAVING RATE IN THE NEOCLASSICAL GROWTH MODEL WITH CES PRODUCTION

This paper characterizes the global dynamics of the saving rate in the neoclassical growth model with CES production. The study is based on qualitative phase-diagram analysis. The analytical conditions characterizing the cases that may arise theoretically depending on the parameters' configurat...

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Bibliographic Details
Published in:Macroeconomic dynamics 2008-04, Vol.12 (2), p.195-210
Main Author: GÓMEZ, MANUEL A.
Format: Article
Language:English
Subjects:
Capital stock
Consumption
Economic growth
Economic theory
Elasticity
Growth models
Households
Income distribution
Investments
Macroeconomics
Personal finance
Production functions
Savings
Studies
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Summary:This paper characterizes the global dynamics of the saving rate in the neoclassical growth model with CES production. The study is based on qualitative phase-diagram analysis. The analytical conditions characterizing the cases that may arise theoretically depending on the parameters' configuration are obtained. It is well known that the saving rate behaves monotonically if technology is Cobb-Douglas. However, when the elasticity of substitution is nonunitary, the saving rate path may exhibit nonmonotonic behavior.
ISSN:1365-1005
1469-8056
DOI:10.1017/S1365100507060464