Habit Formation And Preference Change In A Twosector Growth Model With Elastic Labor Supply
The purpose of this study is to develop a two sector growth model with elastic labor supply and preference change. The preference change is influenced by the ideas of time preference and habit formation in the Ramsey-type growth theory. This study deals with interactions among capital accumulation, economic structure, labor supply, labor and capital distribution, habit formation and time preference in an integrated framework. The paper simulates the three autonomous nonlinear differential equations which determine the motion of the whole economy. The economy is demonstrated to have a unique stable equilibrium point. The comparative dynamic analysis provides some insights. For instance, as the propensity to use leisure time is more strongly affected by wage rate, the economic system is affected as follows: the habit stock of leisure time and leisure time are increased; the propensity to use leisure time is increased, the propensities to consume and to save are affected slightly; the work hours, total labour force and total capital are reduced; the output levels and two inputs of the two sectors are all reduced; the wage rate and the price of consumer goods are reduced; the GDP falls.
Volume (Year): 1 (2013)
Issue (Month): 2 (May)
|Contact details of provider:|| |
References listed on IDEAS
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.:
- Mehra, Rajnish & Prescott, Edward C., 1985.
"The equity premium: A puzzle,"
Journal of Monetary Economics,
Elsevier, vol. 15(2), pages 145-161, March.
- R. Mehra & E. Prescott, 2010. "The equity premium: a puzzle," Levine's Working Paper Archive 1401, David K. Levine.
- Jeremy Lise & Shannon Seitz, 2011. "Consumption Inequality and Intra-household Allocations," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 328-355.
- Jeremy Lise & Shannon Seitz, 2004. "Consumption Inequality and Intra-Household Allocations," Working Papers 1019, Queen's University, Department of Economics.
- Jeremy Lise & Shannon Seitz, 2005. "Consumption Inequality and Intra-Household Allocations," Labor and Demography 0504001, EconWPA.
- Shannon Seitz & Jeremy Lise, 2005. "Consumption Inequality and Intra-Household Allocations," 2005 Meeting Papers 448, Society for Economic Dynamics.
- Jeremy Lise & Shannon Seitz, 2007. "Consumption inequality and intra-household allocations," IFS Working Papers W07/09, Institute for Fiscal Studies.
- Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
- Robert J. Barro, 1995. "Inflation and Economic Growth," NBER Working Papers 5326, National Bureau of Economic Research, Inc.
- Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
- Drugeon, Jean-Pierre & Venditti, Alain, 2001. "Intersectoral external effects, multiplicities & indeterminacies," Journal of Economic Dynamics and Control, Elsevier, vol. 25(5), pages 765-787, May.
- Dornbusch, Rudiger & Frenkel, Jacob A, 1973. "Inflation and Growth: Alternative Approaches," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 5(1), pages 141-156, Part I Fe.
- Gary S. Becker & Casey B. Mulligan, 1997. "The Endogenous Determination of Time Preference," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 729-758.
- Amato, Jeffery D. & Laubach, Thomas, 2004. "Implications of habit formation for optimal monetary policy," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 305-325, March.
- Jeffery D. Amato & Thomas Laubach, 2001. "Implications of habit formation for optimal monetary policy," Finance and Economics Discussion Series 2001-58, Board of Governors of the Federal Reserve System (U.S.).
- Jeffery D. Amato & Thomas Laubach, 2002. "Implications of habit formation for optimal monetary policy," BIS Working Papers 121, Bank for International Settlements.
- Horioka, Charles Yuji, 1990. "Why is Japan's household saving rate so high? A literature survey," Journal of the Japanese and International Economies, Elsevier, vol. 4(1), pages 49-92, March.
- Yuji Horioka, Charles, 1988. "Why is Japan's Household Saving Rate So High? A Literature Survey," CEPR Publications 244421, Stanford University, Center for Economic Policy Research.
- Altavilla, Carlo & Garofalo, Antonio & Vinci, Concetto Paolo, 2005. "Evaluating the effects of working hours on employment and wages," Journal of Policy Modeling, Elsevier, vol. 27(6), pages 647-664, September.
- Carlo Altavilla & Antonio Garofalo & Concetto Paolo Vinci, 2004. "Evaluating The Effects Of Working Hours On Employment And Wages," Working Papers 11_2004, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
- Storesletten, Kjetil & Telmer, Christopher I. & Yaron, Amir, 2004. "Consumption and risk sharing over the life cycle," Journal of Monetary Economics, Elsevier, vol. 51(3), pages 609-633, April.
- Kjetil Storesletten & Chris Telmer & Amir Yaron, 1997. "Consumption and risk sharing over the life cycle," GSIA Working Papers 228, Carnegie Mellon University, Tepper School of Business.
- Storesletten, Kjetil & Telmer, Chris & Yaron, Amir, 2002. "Consumption and Risk Sharing Over the Life Cycle," Seminar Papers 702, Stockholm University, Institute for International Economic Studies.
- Kjetil Storesletten & Chris I. Telmer & Amir Yaron, 2000. "Consumption and Risk Sharing Over the Life Cycle," NBER Working Papers 7995, National Bureau of Economic Research, Inc.
- Wei-Bin Zhang, 2005. "A Two-Sector Growth Model with Labour Supply," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(3), pages 245-260, September.
- Ken-Ichi Hirose & Shinsuke Ikeda, 2008. "On Decreasing Marginal Impatience," The Japanese Economic Review, Japanese Economic Association, vol. 59(3), pages 259-274.
- Jean-Pierre Drugeon, 2000. "On the roles of impatiencein homothetic growth paths," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 15(1), pages 139-161.
- Zhang, Wei-Bin, 1993. "A woman's labor participation and economic growth : Creativity, knowledge utilization and family preference," Economics Letters, Elsevier, vol. 42(1), pages 105-110.
- Wei-Bin ZHANG, 2012. "Habits, Saving Propensity, And Economic Growth," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(2), pages 3-15.
- Kuroda, Sachiko & Yamamoto, Isamu, 2012. "Impact of overtime regulations on wages and work hours," Journal of the Japanese and International Economies, Elsevier, vol. 26(2), pages 249-262.
- de la Croix, David, 1996. "The dynamics of bequeathed tastes," Economics Letters, Elsevier, vol. 53(1), pages 89-96, October.
- de la Croix, David, 1996. "The Dynamics of Bequeathed Tastes," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 1996004, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
- Morten Ravn & Stephanie Schmitt-Grohé & Martín Uribe, 2006. "Deep Habits," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 195-218.
- Ravn, Morten O & Schmitt-Grohé, Stephanie & Uribe, Martín, 2004. "Deep Habits," CEPR Discussion Papers 4269, C.E.P.R. Discussion Papers.
- Morten Ravn & Stephanie Schmitt-Grohe & Martin Uribe, 2004. "Deep Habits," NBER Working Papers 10261, National Bureau of Economic Research, Inc.
- Morten O. Ravn & Stephanie Schmitt-Grohe, 2004. "Deep Habits," 2004 Meeting Papers 208, Society for Economic Dynamics.
- Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, January.
- Dioikitopoulos, Evangelos V. & Kalyvitis, Sarantis, 2010. "Endogenous Time Preference And Public Policy: Growth And Fiscal Implications," Macroeconomic Dynamics, Cambridge University Press, vol. 14(S2), pages 243-257, November.
- Sundaresan, Suresh M, 1989. "Intertemporally Dependent Preferences and the Volatility of Consumption and Wealth," Review of Financial Studies, Society for Financial Studies, vol. 2(1), pages 73-89.
- Corrado, Luisa & Holly, Sean, 2011. "Multiplicative habit formation and consumption: A note," Economics Letters, Elsevier, vol. 113(2), pages 116-119.
- Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834.
- Michael Stern, 2006. "Endogenous time preference and optimal growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 29(1), pages 49-70, September.
- Palivos, Theodore & Wang, Ping & Zhang, Jianbo, 1997. "On the Existence of Balanced Growth Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(1), pages 205-224, February.
- Carroll, Christopher D., 2000. "Solving consumption models with multiplicative habits," Economics Letters, Elsevier, vol. 68(1), pages 67-77, July.
- Christopher D Carroll, 2000. "Solving Consumption Models with Multiplicative Habits," Economics Working Paper Archive 421, The Johns Hopkins University,Department of Economics.
- Drugeon, Jean-Pierre, 1996. "Impatience and long-run growth," Journal of Economic Dynamics and Control, Elsevier, vol. 20(1-3), pages 281-313.
- Eric Kam & Mohammed Mohsin, 2006. "Monetary policy and endogenous time preference," Journal of Economic Studies, Emerald Group Publishing, vol. 33(1), pages 52-67, January. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:tig:journl:v:1:y:2013:i:2:p:3-20. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maria Oroian)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.