Endogenous time preferences and Environmental quality: Multiple equilibria and Fiscal implications

Abstract

This thesis analyzes a model of growth with endogenous time preferences, taking forward the model by Chaudhry et al. (2017). Economic growth is determined by factors like consumption, income, savings etc., and this thesis will include environmental quality as a factor in the pro- duction function. The analysis will focus on how incorporating endogenous discounting into individual preferences a®ects economic growth. I hypothesize the presence of multiple equilibria, one low growth and one high growth. Also the requisite stability analysis will be done to look at stable equilibria along the balanced growth path. Furthermore, I will analyze how ¯scal policy can be used to affect the growth rate in the economy.