Growth with Age-Dependent Preferences

In the new CAMP working paper 14/2018, Mehlum, Torvik and Valente study the consequences of age-dependent preferences for economic growth and structural change in a two-sector model with overlapping generations and non-diminishing returns to capital.

The results suggest that preferences and the demographic structure are key ingredients to build a theory of circular causality in which economic growth is both a cause and a consequence of structural change. Investigating the role played by age-dependent needs and intergenerational income shares in driving the process of economic development, is the main suggestion for future research.

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