Corpus ID: 17618087

Utility Function and Optimum Consumption in the models with Habit Formation and Catching up with the Joneses

@article{Naryshkin2009UtilityFA,
  title={Utility Function and Optimum Consumption in the models with Habit Formation and Catching up with the Joneses},
  author={R. Naryshkin and M. Davison},
  journal={arXiv: General Finance},
  year={2009}
}
  • R. Naryshkin, M. Davison
  • Published 2009
  • Economics, Mathematics
  • arXiv: General Finance
  • This paper analyzes popular time-nonseparable utility functions that describe "habit formation" consumer preferences comparing current consumption with the time averaged past consumption of the same individual and "catching up with the Joneses" (CuJ) models comparing individual consumption with a cross-sectional average consumption level. Few of these models give reasonable optimum consumption time series. We introduce theoretically justified utility specifications leading to a plausible… CONTINUE READING

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