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EQUILIBRIUM DYNAMICS IN AN ENDOGENOUS GROWTH MODEL WITH HABIT FORMATION AND ELASTIC LABOR SUPPLY

Published online by Cambridge University Press:  11 November 2013

Manuel A. Gómez
Manuel A. Gómez*
Affiliation:
University of A Coruña
*
Address correspondence to: Manuel A. Gómez, Department of Applied Economics II, University of A Coruña, Campus de Elviña, 15071 A Coruña, Spain; e-mail: [email protected].
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Abstract

This paper analyzes the dynamics of an endogenous growth model with external habit formation and elastic labor supply. We first derive the conditions for the existence, uniqueness, and saddlepath stability of a feasible steady state with positive long-run growth. The global dynamics of the economy are characterized by phase-diagram analysis. Then we characterize the comparative static effects of shocks in preferences and production parameters analytically. The comparative dynamic effects of the shocks are characterized by phase-diagram analysis.

Keywords

Endogenous GrowthHabitsLeisureEquilibrium Dynamics
Type
Articles
Information
Macroeconomic Dynamics , Volume 19 , Issue 3 , April 2015 , pp. 618 - 642
Copyright
Copyright © Cambridge University Press 2013 

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