On the Closed-Form Solution to the Endogenous Growth Model with Habit Formation

Ryoji Hiraguchi

Faculty of Economics, Ritsumeikan University, Kyoto, Japan.

DOI: 10.4236/tel.[phone]                

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.

Keywords

Endogenous Growth; Closed-Form Solution; Habit Formation

Conflicts of Interest

The authors declare no conflicts of interest.

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