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.:
- 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.
- 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.
- Jeremy Lise & Shannon Seitz, 2011.
"Consumption Inequality and Intra-household Allocations,"
Review of Economic Studies,
Oxford University Press, vol. 78(1), pages 328-355.
- Shannon Seitz & Jeremy Lise, 2005. "Consumption Inequality and Intra-Household Allocations," 2005 Meeting Papers 448, Society for Economic Dynamics.
- 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.
- Jeremy Lise & Shannon Seitz, 2007. "Consumption inequality and intra-household allocations," IFS Working Papers W07/09, Institute for Fiscal Studies.
- 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.
- R. Mehra & E. Prescott, 2010.
"The equity premium: a puzzle,"
Levine's Working Paper Archive
1401, David K. Levine.
- Robert J. Barro, 1995.
"Inflation and Economic Growth,"
NBER Working Papers
5326, National Bureau of Economic Research, Inc.
- Drugeon, Jean-Pierre, 1996. "Impatience and long-run growth," Journal of Economic Dynamics and Control, Elsevier, vol. 20(1-3), pages 281-313.
- 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).
- 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.
- 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.
- 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.
- Ravn, Morten O & Schmitt-Grohé, Stephanie & Uribe, Martín, 2004.
CEPR Discussion Papers
4269, C.E.P.R. Discussion Papers.
- 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.
- Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834.
- 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.
- 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.
- Wei-Bin ZHANG, 2012. "Habits, Saving Propensity, And Economic Growth," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 11(2), pages 3-15.
- 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.
- 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 205-24, February.
- 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.
- 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.
- Jeffery D. Amato & Thomas Laubach, 2002.
"Implications of habit formation for optimal monetary policy,"
BIS Working Papers
121, Bank for International Settlements.
- 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.).
- 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.
- Ken-Ichi Hirose & Shinsuke Ikeda, 2008. "On Decreasing Marginal Impatience," The Japanese Economic Review, Japanese Economic Association, vol. 59(3), pages 259-274.
- Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, June.
- Dornbusch, Rudiger & Frenkel, Jacob A, 1973. "Inflation and Growth: Alternative Approaches," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 5(1), pages 141-56, Part I Fe.
- Corrado, Luisa & Holly, Sean, 2011. "Multiplicative habit formation and consumption: A note," Economics Letters, Elsevier, vol. 113(2), pages 116-119.
- 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.
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 references are entirely missing, you can add them using this form.