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Multiple BGPs in a Growth Model with Habit Persistence: A Comment
Author(s) -
TOCHE PATRICK
Publication year - 2009
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2008.00192.x
Subject(s) - indeterminacy (philosophy) , chen , saddle , habit , persistence (discontinuity) , consumption (sociology) , saddle point , economics , path (computing) , mathematical economics , growth model , econometrics , mathematics , computer science , sociology , mathematical optimization , psychology , epistemology , engineering , philosophy , social psychology , biology , paleontology , social science , geometry , geotechnical engineering , programming language
Recently in this journal, Chen (2007) analyzes a model of an economy without distortions in which rational forward‐looking households care about how their current consumption compares with their own past consumption. Chen claims the existence of two saddle‐point stable balanced growth paths. In this comment, I show that the claim is incorrect. There is a unique saddle‐point stable balanced growth path and no global indeterminacy.