Habit Formation and Preference Change with Capital and Renewable Resources

• Authors: Wei-Bin Zhang
• Languages of publication: EN

Abstracts

EN

Background: Although there are many formal models about interactions among habit formation, preference change and the economic growth, only a few formal models examine implications of habit formation and preference change for the economic growth with resources. Objectives: This paper builds an economic growth model with endogenous physical capital, renewable resources, habit formation and preference. Methods: Although it is influenced by the Ramsey growth theory with time preference and habit formation, the paper applies a new approach to the household behaviour. Results: We plot the motion of the economy and conduct a comparative dynamic analysis with regard to certain parameters to obtain insights into interactions between the preference and the economic structural changes. Conclusions: We have shown that habit formation and preference change have significant effects on the economic grow and resources utilization both with regard to the transitional paths and the long-run equilibrium.

Keywords

EN

Renewable resources; habit formation; preference change; economic growth and structural change

• Publisher: Sciendo
• Journal: Business Systems Research Journal
• Year: 2013
• Volume: 4
• Issue: 2
• Pages: 108-125

Dates

published

2013-12-01

online

2014-01-22

Contributors

author

Wei-Bin Zhang

• Ritsumeikan Asia Pacific University, College of International Management, Japan

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Identifiers

DOI

10.2478/bsrj-2013-0016