Artikel
Indeterminacy with preferences featuring multiplicative habits in consumption: lessons from Bulgaria (1999-2016)
We introduce consumption habits into an exogenous growth model augmented with a detailed government sector, and calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We show that in contrast to the case without habits, e.g., Vasilev (2009), when the economy features saddle-path stability, the habit motive alone leads to equilibrium indeterminacy in the model. When habits enter multiplicatively in the representative agent's utility function, the setup exhibits "sink" dynamics, and equilibrium paths are determined by "animal spirits." These results are in line with the findings in the literature, e.g., Benhabib and Farmer (1994, 1996) and Farmer (1999), and have major implications for policy-making and welfare.
- Sprache
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Englisch
- Erschienen in
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Journal: Journal of Economics and Econometrics ; ISSN: 2032-9660 ; Year: 2020 ; Issue: forthcoming ; Brussels: Economics and Econometrics Research Institute
- Klassifikation
-
Wirtschaft
Business Fluctuations; Cycles
Investment; Capital; Intangible Capital; Capacity
- Ereignis
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Geistige Schöpfung
- (wer)
-
Vasilev, Aleksandar
- Ereignis
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Veröffentlichung
- (wer)
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Economics and Econometrics Research Institute
ZBW – Leibniz Information Centre for Economics
- (wo)
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Brussels
- (wann)
-
2020
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:41 MEZ
Datenpartner
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Objekttyp
- Artikel
Beteiligte
- Vasilev, Aleksandar
- Economics and Econometrics Research Institute
- ZBW – Leibniz Information Centre for Economics
Entstanden
- 2020
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