Endogenous growth with addictive habits
Language
EN
Article de revue
This item was published in
Journal of Mathematical Economics. 2015-01-31, vol. 56, p. 15-25
Abstract
In this paper, we investigate the global dynamics of an endogenous growth model with linear technology and addictive habits. We find feasible parameters’ conditions under which: (a) the resulting equilibrium consumption ...Read more >
In this paper, we investigate the global dynamics of an endogenous growth model with linear technology and addictive habits. We find feasible parameters’ conditions under which: (a) the resulting equilibrium consumption path is steeper than in a standard AK model; (b) endogenous fluctuations in the form of damping fluctuations around the balanced growth path emerge; (c) the Easterlin’s paradox emerges. The relevance of these results is explained comparing our findings with the results already known in the existing literature.Read less <
English Keywords
Habit formation
Consumption smoothing
Endogenous fluctuations