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The impact of habits formation over social programs to reduce the poverty in Peru

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  • Renzo Vidal Caycho
  • Madeherick Bejarano Pacheco

Abstract

Consumption patterns have a great impact in consumption of low income population. In fact, the Average Propensity of Consume (ACP) in long term is less than 1 for people who are not poor, but is close or above 1 for poor people. This means that customs or habits formation are different for each social stratum. So, will these consumption patterns change in times of economic crisis? Or stay as such despite economic crisis or not. Apparently, these habits would not change, which means that consumption patterns are deeply ingrained in customs. We propose a dynamic general equilibrium model where the impact of habits is diagnosed through the variable (phi) and observe the consumption path over time to demonstrate that these habits are not influenced by exogenous supply shock since consumption would not suffer any changes. The effects of disturbances must be distributed with greater persistence along time.

Suggested Citation

  • Renzo Vidal Caycho & Madeherick Bejarano Pacheco, 2018. "The impact of habits formation over social programs to reduce the poverty in Peru," Revista de Análisis Económico y Financiero, Universidad de San Martín de Porres, vol. 1(01), pages 11-23.
    • Handle: RePEc:alp:revaef:01-01
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    References listed on IDEAS

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    1. Iván Rivera, 2012. "Microeconomía de la pobreza: el caso del Perú," Revista Economía, Fondo Editorial - Pontificia Universidad Católica del Perú, vol. 35(69), pages 9-52.
    2. Raquel Carrasco & José M. Labeaga & J. David López-Salido, 2005. "Consumption and Habits: Evidence from Panel Data," Economic Journal, Royal Economic Society, vol. 115(500), pages 144-165, January.
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    Cited by:

    1. Renzo Vidal Caycho & Julio Eduardo Yarasca Moscol, 2021. "Impuesto a la riqueza en épocas de la COVID-19: El caso peruano," Revista de Análisis Económico y Financiero, Universidad de San Martín de Porres, vol. 4(01), pages 31-39.

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