Endogenous Growth with Addictive Habits
Emmanuelle Augeraud-Véron () and
Discussion Papers from Department of Economics, University of York
In this paper, we investigate the global dynamics of an endogenous growth model with linear technology and addictive habits. We find feasible parametersâ€™ conditions under which: a) the resulting equilibrium consumption path is steeper than in a standard AK model; b) endogenous fluctuations in the form of damping fluctuations around the balanced growth path emerge; c) the Easterlinâ€™s paradox emerges. The relevance of these results is explained comparing our findings with the results already known in the existing literature.
Keywords: Habit formation; consumption smoothing, endogenous fluctuations. (search for similar items in EconPapers)
JEL-codes: E00 E21 O40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ger, nep-gro and nep-mac
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Journal Article: Endogenous growth with addictive habits (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:14/16
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