Impatience and long-run growth

This contribution is concerned with the possibility of a perpetual growth path at increasing rates in a nonconvex optimal growth model with endogenous discounting. Sufficient conditions for the existence of this path can be established when the economy is populated by agents whose impatience does not increase too much along the course of a consumption path. In the opposite case, the dynamical system is asymptotically described by a steady state. However, this steady state position need not be uniquely defined: saddlepoint equilibria and locally oscillating unstable equilibria may alternate. In spite of increasingly impatient agents along the growth process, it remains optimal for a government to subsidize the competitive economy. Under a razor edge assumption on impatience, a growing planning solution may coexist with a stationary competitive solution.