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A Closed‐form Solution of a Two‐sector Endogenous Growth Model with Habit Formation
Author(s) -
Chilarescu Constantin,
Viasu Ioana
Publication year - 2016
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.12067
Subject(s) - habit , endogenous growth theory , economics , growth function , function (biology) , growth model , econometrics , microeconomics , mathematical economics , mathematics , biology , psychology , statistics , microbiology and biotechnology , economic growth , social psychology , human capital
This paper determines a closed‐form solution of the two‐sector endogenous growth model with habit formation. Differently to the paper of Hiraguchi, but similar to other approaches as those of Gomez, Turnovsky and Monteiro, we consider that the habits are formed in an external manner and enter additively into the utility function.