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Joao Ricardo Faria
''Growth and labor supply in the presence of habit formation in consumption''
( 2002, Vol. 4 No.5 )
This paper examines a model with habit formation in consumption. The model leads to higher equilibrium values in consumption, output, capital accumulation and labor supply than the neoclassical growth model with elastic labor supply. Comparative static analysis shows that an increase in the importance of consumption in the recent past in habit formation is associated with a decrease in growth and labor supply. On the other hand, an increase of the importance of habit stock relatively to present consumption, is found to stimulate growth and labor supply.
Keywords: Consumption behavior
JEL: D1 - Household Behavior: General
O4 - Economic Growth and Aggregate Productivity: General
Manuscript Received : Feb 25 2002 Manuscript Accepted : Feb 25 2002

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