Matsen, Egil - Institutt for Samfunnsøkonomi, Norges … - 2001
growth, and welfare. As with time separable preferences asset trade increases the mean growth rate, but it also increases … growth-volatility. We demonstrate that the welfare gain from asset trade is lower with habit persistence in consumption. This … growth. Calibrating the model to data for North America and Western Europe, we find that habit persistence lowers welfare …