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Endogenous growth with addictive habits

Author

Listed:
  • Emmanuelle Augeraud-Veron

    (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique)

  • Mauro Bambi

Abstract

In this paper, we investigate the global dynamics of an endogenous growth model with linear technology and addictive habits. We find feasible parameters' conditions under which: (a) the resulting equilibrium consumption path is steeper than in a standard AK model; (b) endogenous fluctuations in the form of damping fluctuations around the balanced growth path emerge; (c) the Easterlin's paradox emerges. The relevance of these results is explained comparing our findings with the results already known in the existing literature.

Suggested Citation

  • Emmanuelle Augeraud-Veron & Mauro Bambi, 2015. "Endogenous growth with addictive habits," Post-Print hal-02871278, HAL.
    • Handle: RePEc:hal:journl:hal-02871278
    DOI: 10.1016/j.jmateco.2014.11.002
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    Cited by:

    1. Giorgio Fabbri & Silvia Faggian & Salvatore Federico & Fausto Gozzi, 2025. "Optimal Control in Infinite Dimensional Spaces and Economic Modeling: State of the Art and Perspectives," Working Papers 2025-06, Grenoble Applied Economics Laboratory (GAEL).
    2. Emmanuelle Augeraud-Veron & Mauro Bambi & Fausto Gozzi, 2017. "Solving Internal Habit Formation Models Through Dynamic Programming in Infinite Dimension," Journal of Optimization Theory and Applications, Springer, vol. 173(2), pages 584-611, May.
    3. Yang, Zaifu & Zhang, Rong, 2018. "On the diversity of growth patterns with habit formation," Economics Letters, Elsevier, vol. 170(C), pages 155-158.
    4. Giorgio Fabbri & Emmanuelle Augeraud-Véron, 2025. "Economic insecurity, memory effects and allocations choices," Working Papers hal-05398465, HAL.
    5. Tzu-Ming Liu, 2020. "Habit formation or word of mouth: What does lagged dependent variable in tourism demand models imply?," Tourism Economics, , vol. 26(3), pages 461-474, May.
    6. Gómez, Manuel A., 2021. "On the closed-form solution of an endogenous growth model with anticipated consumption," Journal of Mathematical Economics, Elsevier, vol. 95(C).
    7. Augeraud-Veron, Emmanuelle & Boucekkine, Raouf & Gozzi, Fausto & Venditti, Alain & Zou, Benteng, 2024. "Fifty years of mathematical growth theory: Classical topics and new trends," Journal of Mathematical Economics, Elsevier, vol. 111(C).

    More about this item

    Keywords

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    JEL classification:

    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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