THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT

THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT

This paper quantifies the welfare cost of consumption externalities in an endogenous growth model with habit formation. Agent's utility depends on both current consumption and a reference consumption level determined by economy-wide average past consumption. Although utility may be lower in the...

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Autor principal: Gómez,Manuel A
Lenguaje:English
Publicado: Universidad de Chile. Departamento de Economía 2010
Materias:
Welfare
Habit formation
Endogenous growth
Acceso en línea:http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862010000100001
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spelling oai:scielo:S0718-528620100001000012010-07-14THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENTGómez,Manuel A Welfare Habit formation Endogenous growth This paper quantifies the welfare cost of consumption externalities in an endogenous growth model with habit formation. Agent's utility depends on both current consumption and a reference consumption level determined by economy-wide average past consumption. Although utility may be lower in the presence of consumption externalities, the welfare loss relative to the efficient growth path is found to be very small. This result is extremely robust to variations in the parameter values. However, there are relatively important differences in the timing of the welfare loss and in generational welfare.info:eu-repo/semantics/openAccessUniversidad de Chile. Departamento de EconomíaEstudios de economía v.37 n.1 20102010-06-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862010000100001en10.4067/S0718-52862010000100001
institution Scielo Chile
collection Scielo Chile
language English
topic Welfare
Habit formation
Endogenous growth
spellingShingle Welfare
Habit formation
Endogenous growth
Gómez,Manuel A
THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT
description This paper quantifies the welfare cost of consumption externalities in an endogenous growth model with habit formation. Agent's utility depends on both current consumption and a reference consumption level determined by economy-wide average past consumption. Although utility may be lower in the presence of consumption externalities, the welfare loss relative to the efficient growth path is found to be very small. This result is extremely robust to variations in the parameter values. However, there are relatively important differences in the timing of the welfare loss and in generational welfare.
author Gómez,Manuel A
author_facet Gómez,Manuel A
author_sort Gómez,Manuel A
title THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT
title_short THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT
title_full THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT
title_fullStr THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT
title_full_unstemmed THE WELFARE COST OF EXTERNAL HABITS: A QUANTITATIVE ASSESSMENT
title_sort welfare cost of external habits: a quantitative assessment
publisher Universidad de Chile. Departamento de Economía
publishDate 2010
url http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-52862010000100001
work_keys_str_mv AT gomezmanuela thewelfarecostofexternalhabitsaquantitativeassessment
AT gomezmanuela welfarecostofexternalhabitsaquantitativeassessment
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