Informal Institutions, Consumption Custom, and Assumption of OLG Model¡ªA Theoretical Analysis on Households¡¯ Consumption Decisions in the Oriental Culture and Belief

Shao¡äan Huang and Tao Sun ()
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Shao¡äan Huang: Center for Economic Research, Shandong University, Jinan 250100, PRC
Tao Sun: Center for Economic Research, Shandong University, Jinan 250100, PRC

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2006, vol. 1, issue 1, 140-152

Abstract: Orthodox consumption theories have not incorporated the overlapping-generations (OLG) model and wealth-stock model, whereas this article explains households characters in consumption and savings in countries such as China and some other regions from the viewpoints of social convention, moral formation, ethics, and other informal institutions. The authors exploit and extend the OLG model, introduce the concepts of bequest, gift, and wealth preference to the economic agent s utility function, then apply optimal conditions to analyzing the characters and problems concerning consumption and savings behavior. Furthermore, they deliberate on the effects of this analysis on government macroeconomic policies and suggest some relevant theoretical thinking and solutions.

Keywords: social convention; consumption behavior; overlapping-generations model (search for similar items in EconPapers)
JEL-codes: D11 E11 E21 (search for similar items in EconPapers)
Date: 2006
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