Some foundations for multiplicative habits models
AbstractConsumption models with multiplicative habits are becoming increasingly popular. However, mathematical foundations of such models are incomplete because the utility function with multiplicative habits is not concave. This paper shows that an optimal consumption path exists and it satisfies the first order conditions. The paper also shows that when the production function is linear, consumption growth rate along the optimal path converges to a positive constant under several parametric restrictions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 30 (2008)
Issue (Month): 3 (September)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622617
Other versions of this item:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen Turnovsky, 2004.
"Habit Formation, Catching Up with the Joneses, and Economic Growth,"
UWEC-2004-09-P, University of Washington, Department of Economics, revised Jan 2004.
- Francisco Alvarez-Cuadrado & Goncalo Monteiro & Stephen J. Turnovsky, 2004. "Habit Formation, Catching Up with the Joneses, and Economic Growth," Journal of Economic Growth, Springer, vol. 9(1), pages 47-80, 03.
- Takashi Kamihigashi, 2002.
"A simple proof of the necessity of the transversality condition,"
Springer, vol. 20(2), pages 427-433.
- Takashi Kamihigashi, 2001. "A Simple Proof of the Necessity of the Transversality Condition," Discussion Paper Series 116, Research Institute for Economics & Business Administration, Kobe University.
- Alonso-Carrera, Jaime & Caballe, Jordi & Raurich, Xavier, 2005.
"Growth, habit formation, and catching-up with the Joneses,"
European Economic Review,
Elsevier, vol. 49(6), pages 1665-1691, August.
- Jaime Alonso-Carrera & Jordi Caball?Author-Email: firstname.lastname@example.org & Xavier Raurich, . "Growth, Habit Formation, and Catching-up\ with the Joneses," UFAE and IAE Working Papers 497.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Christopher D Carroll, 2000.
"Solving Consumption Models with Multiplicative Habits,"
Economics Working Paper Archive
421, The Johns Hopkins University,Department of Economics.
- Carroll, Christopher D., 2000. "Solving consumption models with multiplicative habits," Economics Letters, Elsevier, vol. 68(1), pages 67-77, July.
- Christopher D. Carroll & Jody Overland & David N. Weil, 1997.
"Comparison Utility in a Growth Model,"
NBER Working Papers
6138, National Bureau of Economic Research, Inc.
- Christopher D. Carroll & Jody Overland & David N. Weil, 1995.
"Saving and growth with habit formation,"
Finance and Economics Discussion Series
95-42, Board of Governors of the Federal Reserve System (U.S.).
- Christopher D. Carroll & Jody Overland & David N. Weil, 2000. "Mathematica code for 'Saving and Growth with Habit Formation' and 'Comparison Utility in a Growth Model'," QM&RBC Codes 43, Quantitative Macroeconomics & Real Business Cycles.
- Nishimura, Kazuo, 1985.
"Competitive equilibrium cycles,"
Journal of Economic Theory,
Elsevier, vol. 35(2), pages 284-306, August.
- Juan Pablo RincÛn-Zapatero & Carlos RodrÌguez-Palmero, 2003. "Existence and Uniqueness of Solutions to the Bellman Equation in the Unbounded Case," Econometrica, Econometric Society, vol. 71(5), pages 1519-1555, 09.
- Manuel Gómez, 2010. "A note on external habits and efficiency in the AK model," Journal of Economics, Springer, vol. 99(1), pages 53-64, February.
- Gomez Suarez, Manuel A., 2008. "Utility and production externalities, equilibrium efficiency and leisure specification," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1496-1519, December.
- Hiraguchi, Ryoji, 2011. "A two sector endogenous growth model with habit formation," Journal of Economic Dynamics and Control, Elsevier, vol. 35(4), pages 430-441, April.
- Gómez Manuel A., 2010. "Endogenous Growth, Habit Formation and Convergence Speed," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-32, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If references are entirely missing, you can add them using this form.