6 ms·
They don't have to deal with intertemporal substitution because their model doesn't consider consumption at all. They care only about the limit of the rate of
by kgwgk 6y ago
They don't have to deal with intertemporal substitution because their model doesn't consider consumption at all.
They care only about the limit of the rate of growth when the horizon grows. It's effectively a single (infinite) period model.
At best, they just repeat a well-known argument supporting logarithmic utility. It's just a special case within the expected utility framework.