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Ryoji Hiraguchi
''Habit formation and multiplicity of balanced growth path: a comment''
( 2007, Vol. 14 No.3 )
Chen (Journal of Money, Credit and Banking [2007] 25-48) studies the AK model where the utility function includes multiplicative habits in consumption and argues that the model has multiple balanced growth paths with different growth rates. However, one of his calculations is incorrect. I show that in his model, the optimal growth rate is uniquely determined.
Keywords: balanced growth path
JEL: N1 - Economic History: Macroeconomics and Monetary Economics; Growth and Fluctuations: General, International, or Comparative
Manuscript Received : Oct 07 2007 Manuscript Accepted : Oct 09 2007

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