Essays on growth and sustainability : discounting, habits and externalities

The thesis addresses three issues related to endogenous discounting, habits in consumption and consumption externalities. In the first chapter, we build a model where the discount rate is endogenous and the production function is able to deliver endogenous growth. We show that with a utility function restricted to take positive values, the model generates an optimal path in accordance with empirical evidence concerning the positive correlation between increasing savings and growth rates, the twin-peaks of economic growth as well as the existence of growth miracles and disasters. In the second chapter, we study a model where agents possess habits in consumption and care about environmental quality. We show that the competitive equilibrium can be characterized by endogenous fluctuations implying the breakdown of different sustainability criteria. Short-run fluctuations can also be present in the optimal case suggesting that we can solve for environmental externalities but not for the sustainability problem if we stick to a standard welfare function without any sustainability constraint. Finally, in the third chapter, we build a model with an endogenous discount rate and consumption externalities affecting both the discount rate and the production function. This allows the existence of multiple equilibria, indeterminacy, cyclical-motions as well as take-offs and depressions through local bifurcations. Unbounded growth is also a possibility in this framework and generates always a unique indeterminate balanced growth path. An appropriate policy should implement a consumption subsidy or tax depending on the magnitude of both kinds of externalities.