By using a two-country model with habit-forming consumers, this paper shows that the transfer paradox can take place in the free-trade, dynamically-stable world economy. When the debtor is more habituated to consumption than the creditor, an income transfer from the creditor to the debtor raises...

Economic interdependence of heterogeneous habit forming consumers is examined by using a two-country model. Due to endogenous interest rate adjustments, consumption-habit dynamics in one country are affected by the other country’s habits and preferences. To characterize the interactive...

Respondents use different ways to respond to rating scale items. Hence, item responses do not only capture the trait to be measured, but also the way respondents react to rating scales. So-called response styles have been incorporated in a variety of psychometric modeling approaches and...