TITLE:
On the Closed-Form Solution to the Endogenous Growth Model with Habit Formation
AUTHORS:
Ryoji Hiraguchi
KEYWORDS:
Endogenous Growth; Closed-Form Solution; Habit Formation
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.4,
November
1,
2012
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.