The New Open Economy Macroeconomics of Working Habits ()
Yunqing Wang1,
Qianwen Liu1,
Bayi Guan2,
Xinyu Sui2
1Financial Research Center, Fudan University, Shanghai, China.
2Commercial College, Yantai Nanshan University, Yantai, China.
DOI: 10.4236/tel.2015.51017
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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.
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.
Conflicts of Interest
The authors declare no conflicts of interest.
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