Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/88598 
Authors: 
Year of Publication: 
2013
Series/Report no.: 
cege Discussion Papers No. 181
Publisher: 
University of Göttingen, Center for European, Governance and Economic Development Research (cege), Göttingen
Abstract: 
This paper integrates imperfect self-control into the standard model of endogenous growth. Individuals are conceptualized as dual-selves consisting of a long-run planner and a short-run doer. The long-run self can partly control the short-run self´s strife for immediate gratification. It is shown that the solution is structurally equivalent to the one of the standard endogenous growth model as long as self-control is sufficiently strong. Within a certain range of self-control an investment subsidy can be useful in order to reduce consumption and to increase investment, growth, and welfare of the long-run self. A consumption tax, perhaps surprisingly, is counterproductive. It induces individuals with limited self-control to consume even more.
Subjects: 
temptation
self-control
consumption
investment
endogenous growth
JEL: 
D91
E21
O40
Document Type: 
Working Paper

Files in This Item:
File
Size
739.19 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.