Asset pricing, habit memory, and the labor market

This article studies the asset pricing and the business cycle implications of habit formation in a production economy with capital adjustment costs and endogenous labor supply. A specification of internal habit in the mix of consumption and leisure which minimizes the wealth effect on labor supply is introduced into an otherwise standard real business cycle model. This mechanism enhances the model’s ability to explain asset pricing puzzles.

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Year of publication:	2010-03-30
Authors:	Jaccard, Ivan
Publisher:	European Central Bank
Subject:	Geldpolitik \| Monetary Policy \| Zentralbank \| Central Bank

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Extent:	1116160 bytes 31 p. application/pdf
Series:	Working paper series / European Central Bank ; 1163
Type of publication:	Book / Working Paper
Language:	English
Classification:	E32 - Business Fluctuations; Cycles ; G12 - Asset Pricing ; J22 - Time Allocation and Labor Supply ; Currency. Monetary policy ; Individual Working Papers, Preprints
Source:	ArchiDok

Persistent link: https://www.econbiz.de/10009640396