U of Texas-Dallas Pol. Econ. Working Paper No. 05/01
9 Pages Posted: 4 Nov 2001
Date Written: October 2001
This paper examines a model with habit formation in consumption. The model leads to higher equilibrium values in consumption, output, capital accumulation and labor supply than the neoclassical growth model with elastic labor supply. Comparative static analysis shows that an increase in the importance of consumption in the recent past in habit formation is associated with a decrease in growth and labor supply. On the other hand, an increase of the importance of habit stock relatively to present consumption, is found to stimulate growth and labor supply.
Keywords: Consumption behavior, Labor supply, Economic growth
JEL Classification: D11, D91, O49
Suggested Citation: Suggested Citation
Faria, João Ricardo, Growth and Labor Supply in the Presence of Habit Formation in Consumption (October 2001). U of Texas-Dallas Pol. Econ. Working Paper No. 05/01. Available at SSRN: https://ssrn.com/abstract=288491 or http://dx.doi.org/10.2139/ssrn.288491