scholarly journals Optimal consumption taxation in a model of endogenous growth with external habit formation

2006 ◽  
Vol 93 (3) ◽  
pp. 427-435 ◽  
Author(s):  
Manuel A. Gómez
Keyword(s):  
Endogenous Growth ◽  
Habit Formation ◽  
Optimal Consumption ◽  
Consumption Taxation

EQUILIBRIUM DYNAMICS IN AN ENDOGENOUS GROWTH MODEL WITH HABIT FORMATION AND ELASTIC LABOR SUPPLY

2013 ◽  
Vol 19 (3) ◽  
pp. 618-642 ◽  
Author(s):  
Manuel A. Gómez
Keyword(s):  
Phase Diagram ◽  
Labor Supply ◽  
Endogenous Growth ◽  
Growth Model ◽  
Habit Formation ◽  
Global Dynamics ◽  
Long Run ◽  
Endogenous Growth Model ◽  
Elastic Labor Supply ◽  
Diagram Analysis

This paper analyzes the dynamics of an endogenous growth model with external habit formation and elastic labor supply. We first derive the conditions for the existence, uniqueness, and saddlepath stability of a feasible steady state with positive long-run growth. The global dynamics of the economy are characterized by phase-diagram analysis. Then we characterize the comparative static effects of shocks in preferences and production parameters analytically. The comparative dynamic effects of the shocks are characterized by phase-diagram analysis.

scholarly journals Consumption and Portfolio Choice under Internal Multiplicative Habit Formation

2019 ◽  
Vol 55 (7) ◽  
pp. 2334-2371
Author(s):  
Servaas van Bilsen ◽  
A. Lans Bovenberg ◽  
Roger J. A. Laeven
Keyword(s):  
Portfolio Choice ◽  
Habit Formation ◽  
Optimal Consumption ◽  
Investment Behavior ◽  
Risky Assets ◽  
General Utility ◽  
Marginal Propensity To Consume ◽  
Investment Opportunities ◽  
Marginal Propensity ◽  
Optimal Consumption And Investment

This paper explores the optimal consumption and investment behavior of an individual who derives utility from the ratio between his consumption and an endogenous habit. We obtain closed-form policies under general utility functionals and stochastic investment opportunities by developing a nontrivial linearization to the budget constraint. This enables us to explicitly characterize how habit formation affects the marginal propensity to consume and optimal stock–bond investments. We also show that in a setting that combines habit formation with Epstein–Zin utility, consumption no longer grows at unrealistically high rates at high ages and investments in risky assets decrease.

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