Patience and Prosperity

This paper introduces wealth-dependent time preference into a simplemodel of endogenous growth. The model generates adjustment dynamics in linewith the historical facts on savings and economic growth in Europe from the HighMiddle Ages to today. Along a virtuous cycle of development more wealth leads tomore patience, which leads to more savings and even higher wealth. Savings ratesand income growth rates are thus jointly increasing during the process of develop-ment until they converge towards constants along a balanced growth path.[...]