Asset pricing, habit memory, and the labor market

Ivan Jaccard

No 1163, Working Paper Series from European Central Bank

Abstract: This article studies the asset pricing and the business cycle implications of habit formation in a production economy with capital adjustment costs and endogenous labour supply. A specification of internal habit in the mix of consumption and leisure which minimizes the wealth effect on labour supply is introduced into an otherwise standard real business cycle model. This mechanism enhances the model's ability to explain asset pricing puzzles. JEL Classification: G12, E32, J22

Keywords: adjustment costs; equity premium puzzle; labour supply (search for similar items in EconPapers)
Date: 2010-03
New Economics Papers: this item is included in nep-dge and nep-lab
Note: 737337
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Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Asset Pricing, Habit Memory, and the Labor Market (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20101163

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