TITLE:
Equilibrium Dynamics in the Neoclassical Growth Model with Habit Formation and Elastic Labor Supply
AUTHORS:
Manuel A. Gómez
KEYWORDS:
Economic Growth; Habit Formation; Equilibrium Dynamics
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.5,
December
27,
2012
ABSTRACT: This note analyzes the equilibrium dynamics in the neoclassical growth model with habit-forming preferences and elastic labor supply. Habits enter into utility in a multiplicative way. The specification of the habit formation process comprises the particular cases of internal and external habits. Existence, uniqueness and saddle-path stability of the steady state are proved analytically.