Saddle-node bifurcations in an optimal growth model with preferences for wealth habit

Date

2014

Authors

Sağlam, Ç.
Turan, A.
Turan, H.

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Abstract

This paper studies the dynamic implications of preferences for wealth habit in a one-sector optimal growth model. We show that the dynamics may encounter saddle-node bifurcations with respect to the parameters of the preferences: the relative weight of wealth in utility and the degree of wealth habit. We analytically provide the monotone comparative statics and the continuity of the critical capital stock with respect to the discount factor, the relative weight of wealth in utility and the degree of wealth habit. © 2014 by Walter de Gruyter Berlin/Boston 2014.

Source Title

Studies in Nonlinear Dynamics and Econometrics

Publisher

Walter de Gruyter GmbH

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Published Version (Please cite this version)

Language

English