Public Spending in a Model of Endogenous Growth with Habit Formation

<table class="table-group" width="800px"><tr class="fig-image" id="a"><td><img alt="514329.fig.001a" src="https://static.hindawi.com/articles/ddns/volume-2010/514329/figures/514329.fig.001a.jpg"/></td></tr><tr class="fig-caption"><td align="center"><table><tr><td><b>(a) </b>Time paths of <svg height="19.4125" id="M307" style="vertical-align:-3.3907pt" version="1.1" viewbox="0 0 18 19.4125" width="18" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink">
<g transform="matrix(.017,-0,0,-.017,2.1,11.5)"><path d="M658 557l-9 -25q-129 23 -320 70q-210 -50 -320 -70l-9 25q232 77 318 116h22q89 -40 318 -116z" id="xF5C02"></path></g><g transform="matrix(.017,-0,0,-.017,.063,15.125)"><path d="M764 650l-7 -26q-61 -10 -91.5 -22.5t-76.5 -48.5l-235 -184q104 -152 208 -276q31 -37 54.5 -48.5t68.5 -16.5l-7 -28h-156q-138 170 -213 284q-19 29 -33.5 35t-33.5 -7l-29 -173q-15 -75 -5.5 -90.5t74.5 -20.5l-5 -28h-260l7 28q58 5 74 21.5t30 89.5l70 378
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<g transform="matrix(.012,-0,0,-.012,13.25,19.2)"><path d="M324 430l-26 -36l-112 -4l-55 -265q-13 -66 7 -66q13 0 44.5 20t50.5 40l17 -24q-38 -40 -85.5 -73.5t-87.5 -33.5q-50 0 -21 138l55 262h-80l-2 8l25 34h66l25 99l78 63l10 -9l-37 -153h128z" id="x1D461"></path></g>
</svg>, <svg height="19.700001" id="M308" style="vertical-align:-3.3907pt" version="1.1" viewbox="0 0 16.7875 19.700001" width="16.7875" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink">
<g transform="matrix(.017,-0,0,-.017,1.875,11.5)"><path d="M658 557l-9 -25q-129 23 -320 70q-210 -50 -320 -70l-9 25q232 77 318 116h22q89 -40 318 -116z" id="xF5C02"></path></g><g transform="matrix(.017,-0,0,-.017,.062,15.413)"><path d="M682 629q-1 -16 -1.5 -72t-2.5 -86l-31 -4q-5 92 -51 129t-139 37q-100 0 -177 -49t-116 -125t-39 -162q0 -122 66 -201t182 -79q83 0 137 42.5t112 128.5l26 -15q-12 -31 -42.5 -88t-45.5 -75q-139 -27 -199 -27q-148 0 -243 81.5t-95 226.5q0 173 129.5 274.5
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<g transform="matrix(.012,-0,0,-.012,12.05,19.488)"><path d="M324 430l-26 -36l-112 -4l-55 -265q-13 -66 7 -66q13 0 44.5 20t50.5 40l17 -24q-38 -40 -85.5 -73.5t-87.5 -33.5q-50 0 -21 138l55 262h-80l-2 8l25 34h66l25 99l78 63l10 -9l-37 -153h128z" id="x1D461"></path></g>
</svg>, and <svg height="19.512501" id="M309" style="vertical-align:-3.3907pt" version="1.1" viewbox="0 0 19.7125 19.512501" width="19.7125" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink">
<g transform="matrix(.017,-0,0,-.017,1.325,11.6)"><path d="M846 558l-8 -26l-415 75l-415 -75l-8 26q293 77 412 121h22q127 -47 412 -121z" id="xF5C03"></path></g><g transform="matrix(.017,-0,0,-.017,.062,15.225)"><path d="M865 650q-1 -4 -4 -14t-4 -14q-62 -5 -77 -19.5t-29 -82.5l-74 -394q-12 -61 -0.5 -77t75.5 -21l-6 -28h-273l8 28q64 5 82 21t29 76l36 198h-380l-37 -197q-11 -64 0.5 -78.5t79.5 -19.5l-6 -28h-268l6 28q60 6 75.5 21.5t26.5 76.5l75 394q13 66 2 81.5t-77 20.5l8 28
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<g transform="matrix(.012,-0,0,-.012,14.975,19.3)"><path d="M324 430l-26 -36l-112 -4l-55 -265q-13 -66 7 -66q13 0 44.5 20t50.5 40l17 -24q-38 -40 -85.5 -73.5t-87.5 -33.5q-50 0 -21 138l55 262h-80l-2 8l25 34h66l25 99l78 63l10 -9l-37 -153h128z" id="x1D461"></path></g>
</svg>.</td></tr></table></td></tr><tr class="fig-image" id="b"><td><img alt="514329.fig.001b" src="https://static.hindawi.com/articles/ddns/volume-2010/514329/figures/514329.fig.001b.jpg"/></td></tr><tr class="fig-caption"><td align="center"><table><tr><td><b>(b) </b>Growth rates of <svg height="15.6875" id="M310" style="vertical-align:-3.3907pt" version="1.1" viewbox="0 0 16.7875 15.6875" width="16.7875" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink">
<g transform="matrix(.017,-0,0,-.017,.062,11.4)"><path d="M682 629q-1 -16 -1.5 -72t-2.5 -86l-31 -4q-5 92 -51 129t-139 37q-100 0 -177 -49t-116 -125t-39 -162q0 -122 66 -201t182 -79q83 0 137 42.5t112 128.5l26 -15q-12 -31 -42.5 -88t-45.5 -75q-139 -27 -199 -27q-148 0 -243 81.5t-95 226.5q0 173 129.5 274.5
t325.5 101.5q114 0 204 -38z" id="x1D436"></path></g>
<g transform="matrix(.012,-0,0,-.012,12.05,15.475)"><path d="M324 430l-26 -36l-112 -4l-55 -265q-13 -66 7 -66q13 0 44.5 20t50.5 40l17 -24q-38 -40 -85.5 -73.5t-87.5 -33.5q-50 0 -21 138l55 262h-80l-2 8l25 34h66l25 99l78 63l10 -9l-37 -153h128z" id="x1D461"></path></g>
</svg>, <svg height="15.4" id="M311" style="vertical-align:-3.3907pt" version="1.1" viewbox="0 0 18 15.4" width="18" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink">
<g transform="matrix(.017,-0,0,-.017,.062,11.112)"><path d="M764 650l-7 -26q-61 -10 -91.5 -22.5t-76.5 -48.5l-235 -184q104 -152 208 -276q31 -37 54.5 -48.5t68.5 -16.5l-7 -28h-156q-138 170 -213 284q-19 29 -33.5 35t-33.5 -7l-29 -173q-15 -75 -5.5 -90.5t74.5 -20.5l-5 -28h-260l7 28q58 5 74 21.5t30 89.5l70 378
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<g transform="matrix(.012,-0,0,-.012,13.25,15.187)"><path d="M324 430l-26 -36l-112 -4l-55 -265q-13 -66 7 -66q13 0 44.5 20t50.5 40l17 -24q-38 -40 -85.5 -73.5t-87.5 -33.5q-50 0 -21 138l55 262h-80l-2 8l25 34h66l25 99l78 63l10 -9l-37 -153h128z" id="x1D461"></path></g>
</svg>, and <svg height="15.4" id="M312" style="vertical-align:-3.3907pt" version="1.1" viewbox="0 0 19.7125 15.4" width="19.7125" xmlns="http://www.w3.org/2000/svg" xmlns:xlink="http://www.w3.org/1999/xlink">
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<g transform="matrix(.012,-0,0,-.012,14.975,15.187)"><path d="M324 430l-26 -36l-112 -4l-55 -265q-13 -66 7 -66q13 0 44.5 20t50.5 40l17 -24q-38 -40 -85.5 -73.5t-87.5 -33.5q-50 0 -21 138l55 262h-80l-2 8l25 34h66l25 99l78 63l10 -9l-37 -153h128z" id="x1D461"></path></g>
</svg>.</td></tr></table></td></tr></table>

<table>Transition dynamics after a 10% reduction in capital.</table>

Discrete Dynamics in Nature and Society

fig1

Figure 1

Figure 1: Public Spending in a Model of Endogenous Growth with Habit Formation 