TY  - JOUR
AU  - Barro,Robert J.
TI  - Myopia and Inconsistency in the Neoclassical Growth Model
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6317
PY  - 1997
Y2  - December 1997
UR  - http://www.nber.org/papers/w6317
L1  - http://www.nber.org/papers/w6317.pdf
N1  - Author contact info:
Robert J. Barro
Department of Economics
Littauer Center 218
Harvard University
Cambridge, MA 02138
Tel: 617/495-3203
Fax: 617/496-8629
E-Mail: rbarro@harvard.edu
AB  - The neoclassical growth model is modified to allow for a non-constant rate of time" preference.  If the household cannot commit future choices of consumption and if utility is" logarithmic, then an equilibrium is found that resembles the standard results of the neoclassical" model.  In this solution, the effective rate of time preference is high model has potentially important implications for institutional design and other policies because" households would benefit from an ability to commit future consumption there is a sense in" which the results are observationally equivalent to those of the conventional model.  When the" framework is extended to allow for partial commitment ability, some testable hypotheses emerge" concerning the link between this ability and the rates of saving and growth.  Steady-state results" are obtained for general concave utility functions, and some properties of the dynamic paths are" worked out for the case of isoelastic utility.
ER  -