Incorporating weakly nonseparable preferences into the familiar time-preference model, we emphasize a role of steady-state welfare changes in determining the effect of permanent tariffs on the current account. The effect consists of: a welfare effect, due to steady-state welfare changes, which...

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 international...

We propose a model of parental altruism in relation with child habit formation, where children are unaware of their developing habits while young, and become cognizant of them only on growing up. We show that an altruistic mother (i) maintains the amount of income transferred to her child lower...

The delay effect, that people discount the near future more than the distant future, has not been verified rigorously. An experiment conducted by us in China confirms that, by separating the delay from the interval, the delay effect exists only within a short delay. The results are reliable,...