Welfare and Convergence Speed in the Ramsey Model under two Classes of Gorman Preferences

Using a one-sector, discrete-time Ramsey model, we analyze and compare the implications for welfare, capital accumulation, and speed of convergence to the steady state of two classes of utility functions that represent Gorman preferences, namely homothetic and Stone–Geary preferences. For identical economies, we show that the preference structure does not affect only the capital dynamics and social welfare but also the speed of convergence to the steady-state equilibrium.