Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171520
Authors: 
Schäfer, Andreas
Valente, Simone
Year of Publication: 
2007
Series/Report no.: 
Economics Working Paper Series 07/77
Abstract: 
We study the general equilibrium properties of two growth models with overlapping generations, habit formation and endogenous fertility. In the neoclassical model, habits modify the economy's growth rate and generate transitional dynamics in fertility; station- ary income per capita is associated with either increasing or decreasing population and output, depending on the strength of habits. In the AK specification, growing population and increasing consumption per capita require that the habit coefficient lie within definite boundaries; outside the critical interval, positive growth is associated with either declining consumption due to overcrowding, or extinction paths with declining population. In both frameworks, habits reduce fertility: the trade-off between second-period consumption and spending for bequests prompts agents to decrease fertility in order to make parental altru- ism less costly. This mechanism suggests that status-dependent preferences may explain part of the decline in fertility rates observed in most developed economies.
Subjects: 
Economic Growth
Endogenous Fertility
Habit Formation
Intergenerational Altruism
Overlapping Generations
JEL: 
D91
J10
O11
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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