Some foundations for multiplicative habits models

Ryoji Hiraguchi ()

Journal of Macroeconomics, 2008, vol. 30, issue 3, pages 873-884

Abstract: Consumption models with multiplicative habits are becoming increasingly popular. However, mathematical foundations of such models are incomplete because the utility function with multiplicative habits is not concave. This paper shows that an optimal consumption path exists and it satisfies the first order conditions. The paper also shows that when the production function is linear, consumption growth rate along the optimal path converges to a positive constant under several parametric restrictions.

Date: 2008

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6X4M ... d8056b3cd31515813ff3
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Some Foundations for Multiplicative Habits Models (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:jmacro:v:30:y:2008:i:3:p:873-884

Access Statistics for this article

Journal of Macroeconomics is edited by Douglas McMillin and Theodore Palivos

More articles in Journal of Macroeconomics from Elsevier
Series data maintained by Heidi Boesdal ().