Research ArticleOpen AccessGoogle Scholar indexed
The New Open Economy Macroeconomics of Working Habits
Financial Research Center, Fudan University, Shanghai, China
Financial Research Center, Fudan University, Shanghai, China
Commercial College, Yantai Nanshan University, Yantai, China
Commercial College, Yantai Nanshan University, Yantai, China
- 1 Financial Research Center, Fudan University, Shanghai, China
- 2 Financial Research Center, Fudan University, Shanghai, China
- 3 Commercial College, Yantai Nanshan University, Yantai, China
- 4 Commercial College, Yantai Nanshan University, Yantai, China
Theoretical Economics Letters·Volume 05 (2015)·Pages 125–131·Published 13 January 2015·DOI10.4236/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.
KeywordsWorking HabitsNew Open Economy MacroeconomicsMonetary and Fiscal Policy
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