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On the Closed-Form Solution to the Endogenous Growth Model with Habit Formation
Faculty of Economics, Ritsumeikan University, Kyoto, Japan
- 1 Faculty of Economics, Ritsumeikan University, Kyoto, Japan
Theoretical Economics Letters·Volume 02 (2012)·Pages 351–354·Published 1 November 2012·DOI10.4236/tel.2012.24064
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Abstract
We study the AK growth model with external habit formation. We show that there exists a unique solution path expressed in terms of the Gauss hypergeometric function. Using the closed-form solution, we also show that the optimal path converges to a balanced growth path.
KeywordsEndogenous GrowthClosed-Form SolutionHabit Formation
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