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Habits, Saving Propensity, And Economic Growth

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  • Wei-Bin ZHANG

    (Ritsumeikan Asia Pacific University, Japan)

Abstract

The purpose of this paper is to study economic growth with preference change on the basis of the Solow one-sector growth model, Zhang’s alternative approach to household behavior, the Ramsey growth theory with time preference, and the traditional growth model with habit formation. The propensity to save is dependent on wealth and current income and the propensity to consumption is related to the habit stock. We simulate the model and demonstrate the motion of the economic dynamics with endogenous preference. We also examine effects of changes in some parameters on the motion of the economic system.

Suggested Citation

  • Wei-Bin ZHANG, 2012. "Habits, Saving Propensity, And Economic Growth," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(2), pages 3-15.
    • Handle: RePEc:pts:journl:y:2012:i:2:p:3-15
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    Cited by:

    1. ZHANG, Wei-Bin, 2013. "Habit Formation And Preference Change In A Twosector Growth Model With Elastic Labor Supply," Academica Science Journal, Economica Series, Dimitrie Cantemir University, Faculty of Economical Science, vol. 1(2), pages 3-20, May.
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    3. Zhang Wei-Bin, 2013. "Habit Formation and Preference Change with Capital and Renewable Resources," Business Systems Research, Sciendo, vol. 4(2), pages 108-125, December.
    4. Wei-Bin Zhang, 2013. "Dynamic Interactions among Growth, Environmental Change, Habit Formation, and Preference Change," The International Journal of Economic Behavior - IJEB, Faculty of Business and Administration, University of Bucharest, vol. 3(1), pages 3-25, December.

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    More about this item

    Keywords

    habit stock; propensity to save; endogenous preference; economic growth;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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