Consumption Externalities, Habit Formation, and Equilibrium Efficiency

We analyze the welfare properties of the competitive equilibrium in a capital accumulation model where individual preferences are subjected to both habit formation and consumption spillovers. We also discuss how consumption externalities and habits interact to generate an inefficient dynamic equilibrium. Finally, we characterize optimal tax policies aimed to restore efficient decentralized paths.

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Year of publication:	2001-10-05
Authors:	Alonso-Carrera, Jaime ; Caballe, Jordi ; Raurich, Xavier
Institutions:	Departament d'Economia i Història Econòmica, Universitat Autònoma de Barcelona
Subject:	Habit Formation \| Consumption Externalities \| Equilibrium Efficiency

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Extent:	application/pdf
Series:	UFAE and IAE Working Papers.
Type of publication:	Book / Working Paper
Language:	English
Notes:	1 pages long
Classification:	D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation ; O40 - Economic Growth and Aggregate Productivity. General
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005572257