Which Of The Following Is An Assumption Of Neoclassical Economics?

Which of the following is an assumption of neoclassical economics?

October Higashi-ku, Fukuoka,Japan, e-mail: nakamoto ip.

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In recent years, there has been a renewed interest in the role of consumption externalities in macroeconomic dynamics. Some of the existing studies such as Ljunavust and Uhlig and Carroll et al. Thus this assumption represents consumption externalities with time delay rather than internal habit formation under which each agent takes its past consumption into account when deciding its optimal saving plans. See Fisher and Hof As it turns out, the steady state of aggregate economy is the same as that of the standard Ramsey model without consumption externalities. In addition, as well as in the standard model without externalities, the steady-state distribution of wealth is history dependent, that is, the long-run wealth distribution depends on the initial distribution of wealth among the agents. These authors also examine a heterogeneous-agent model of neoclassical growth with consumption externalities.

The reminder of this paper is organized as follows. Section 2 sets up the theoretical framework and Section 3 characterizes the steady-state equilibrium.

Section 4 presents a detailed discussion on the relation between consumption externalities and the stationary distribution of wealth. Section 6 concludes.

The Model Households. Each group consists of a continuum of identical households who have the same form of instantaneous utility function and an identical rate of time preference.

For simplicity, we assume here population in the economy is constant. We also assume that the economy is closed and the stock of capital is the only net asset held by agents. The key assumption about the instantaneous felicity function in 1 is that we distinguish intragroup externalities from intergroup externalities. We allow, for example, an agent in a particular group feels jealousy as to consumption of others in her group but admires consumption of agents who belong to the other group.

Related Economics Q&A

Such a situation may emerge, the agents in the rich group admire an increase in the benchmark level of consumption in the poor group, whereas they have jealousy as to the consumption level of other members in her own group. In addition, the agent would be a conformist as to consumption behavior of 5.

Conditions 2a and 2b mean that the marginal utility of own consumption dominates impacts produced by consumption externalities. The initial holding of capital, ki 0is exogenously given. Each household maximizes Ui subject to 3 and the initial holding of capital, ki 0. Remember that households in each group are identical. This elasticity has a positive value due to condition 2c. The sign of this term depends on how group i agents respond to consumption of group j agents.]

Which of the following is an assumption of neoclassical economics? - remarkable

In document Enabling access to housing in Jos, Nigeria : Implementation and the new bureaucrats Page The enabling approach for housing has its origin in the political philosophy of liberalism Pugh, a. Liberalism has economic connotations based upon the principles of market dynamism and efficiency, orthodoxy in macroeconomic management, and certain prescriptions in the politics of institutional conditions and property rights Pugh, a; Misses, pp. In line with this, the classical liberals have often argued that in some way liberty and property are intimately related and a market order based on private property is synonymous with freedom Gaus and Courtland, These assumptions have influenced economic theories that seek to promote efficient production and allocation of goods and services through market freedom. Market freedom is achieved by removing restrictions through liberalisation and deregulation Arestis, Liberalisation has been a key activity around achieving markets that are friendly to the private sector and are also efficient. A typical economic approach that is aligned with these thoughts is neoclassical economics. This perspective is characterised by several assumptions common to many schools of economic thought. There is no complete agreement on what is meant by neoclassical economics, and the result is a wide range of neoclassical approaches to various problem areas and domains - ranging from neoclassical theories of labour to neoclassical theories of demographic change Ferguson,

Which of the following is an assumption of neoclassical economics? - interesting

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