In a two-country world economy, consumption-habit dynamics in one country are affected, due to endogenous interest rate adjustments, by the other country's habits and preferences. External indebtedness depends crucially on international differences in habit-adjusted net output less habitual...

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...

In a two-country model with habit formation, we focus on interdependent macroeconomic adjustments to global and country-specific income shocks. Global habits and habit differentials play key roles in the global equilibrium dynamics, possibly nonmonotonic, and in the determination of...

I develop a dynamic theory of luxury consumption, particularly emphasizing the causal effect that pursuit of luxury goods has on wealth accumulation. A quasi-luxury is defined as a good whose marginal rate of substitution is increasing in a utility index. Under certain conditions, it is indeed a...

ABSTRACT By using a panel survey of Japanese adults, we show that smoking behavior is associated with personal time discounting and its biases, such as hyperbolic discounting and the sign effect, in the way that theory predicts: smoking depends positively on the discount rate and the degree of...

We examine stability of competitive equilibrium in an N-country world economy with capital accumulation, where each country can have either increasing marginal impatience (IMI) or decreasing marginal impatience (DMI). The necessary and sufficient condition for stability is shown as positive...