Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/92830 
Year of Publication: 
2009
Series/Report no.: 
ISER Discussion Paper No. 750
Publisher: 
Osaka University, Institute of Social and Economic Research (ISER), Osaka
Abstract: 
This paper explores the roles of internal and external habit formation in a simple model of endogenous growth with overlapping generations. Unlike the representative agent settings in which the distinction between internal and external habits may not yield significant qualitative differences in working of the model economy, we show that the internal and external habit persistence in overlapping generations economies may have qualitatively different effects on the steady-state characterization as well as on the dynamic behavior of the economy. We also confirm that in an overlapping generations framework, whether the habits in the utility function takes subtractive or multiplicative forms may be critical both for long-run growth and for transitional dynamics.
Subjects: 
internal habits formation
external habit formation
overlapping generations economy
long-run growth
JEL: 
E32
J24
O40
Document Type: 
Working Paper

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