The New Open Economy Macroeconomics of Working Habits - Theoretical Economics Letters

TEL > Vol.5 No.1, February 2015

The New Open Economy Macroeconomics of Working Habits ()

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Download as PDF (Size: 918KB) PP. 125-131

DOI: 10.4236/tel.2015.51017 3,139 Downloads 4,235 Views Citations

Author(s)

Yunqing Wang¹, Qianwen Liu¹, Bayi Guan², Xinyu Sui²

Affiliation(s)

¹Financial Research Center, Fudan University, Shanghai, China.
²Commercial College, Yantai Nanshan University, Yantai, China.

ABSTRACT

This paper develops a new open economy macroeconomics model by allowing for habit formation in labor supply. The main findings of our analysis are that 1) an increase in the importance of working habits strengthens the effect of monetary policy shocks on relative consumption, weakens on change in the equilibrium exchange rate, and 2) an increase in the importance of working habits strengthens the response of relative consumption and the equilibrium exchange rate change to fiscal policy shocks.

KEYWORDS

Working Habits, New Open Economy Macroeconomics, Monetary and Fiscal Policy

Share and Cite:

Wang, Y. , Liu, Q. , Guan, B. and Sui, X. (2015) The New Open Economy Macroeconomics of Working Habits. Theoretical Economics Letters, 5, 125-131. doi: 10.4236/tel.2015.51017.

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