The Interaction Between Time Nonseparable Preferences And Time Aggregaton Ie

Cover The Interaction Between Time Nonseparable Preferences And Time Aggregaton Ie
The Interaction Between Time Nonseparable Preferences And Time Aggregaton Ie
John Eaton
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As in the habit persistence with exponential depreciation model that I considered above, the consumer is assumed to compare the current level of s to an average of past intermediate services. In this case instead of letting the habit stock be a weighted average of all past consumption, assume that the habit stock is given by the level of the intermediate service process of exactly one year ago. In other words sit) is given by: (5. 5) s(t) = s(t) - as(t-4) where the basic time period is assumed ...to be a quarter. The Laplace transform of the distribution g for this case is given by: g^(C) = (^-6)/[l-aexp(-4

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