Habit Persistence and Money in the Utility Function

Stéphane Auray, Fabrice Collard () and Patrick Fève

Economics Bulletin, 2004, vol. 5, issue 10, pages 1-9

Abstract: The paper introduces habit persistence in consumption decisions in an infinitely-lived agents monetary model where money enters in the utility of the agent. In this case, we show that the equilibrium is saddle path whereas Auray, Collard and Fève [2004] showed that the interplay between habit persistence and cash-in-advance generates real indeterminacy. These two distinct but commonly used framework do not lead to the same dynamic properties, therefore.

Keywords: cash-in-advance; habit persistence; Money in the utility function; real indeterminacy; saddle path (search for similar items in EconPapers)
JEL-codes: E0 (search for similar items in EconPapers)
Date: 2004-04-22
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