Many studies have proved that a model with habit formation can well capture consumers’ responses to monetary policy and thus serves as a better platform for monetary policy analyses. However, most studies on monetary policy of Taiwan neglect habit formation. The goal of this paper is to verify the behavior of habit formation in consumption in Taiwan with the generalized methods of moments (GMM). Following Leith and Malley (2005), we develop a dynamic stochastic general equilibrium (DSGE) model in a closed economy and find that habit formation behavior is significant in Taiwan. The results from GMM estimation are as follows. The estimated value of habit persistence is 0.934, accord with that of other countries. Households would spend about 4 years to set the new wage contracts. Furthermore, it takes about 4.5 years for firms to reset the new price.

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This paper chronicles the creation of the smartphone application, `Waste Not, Want Not'. The application is designed to create sustainable habits and change wasteful behaviors in order to reduce personal waste production. The paper explores related works in the fields of environmental science, psychology, and computer science. These related studies establish the need for an application focused on personal waste reduction and the means to build such an application. The design process for the application follows User Experience Design's four phases: Research, Sketch, Design, and Evaluation. The target audience for the application is surveyed and imagined. Next, a basic outline of the application's functionality is created. From this outline, a prototype of the application is built. This prototype undergoes usability testing. It ranks above the average for each of the three usability metrics: effectiveness, efficiency, and satisfaction. The paper then explores possible expansions and implementations of the application.

[pt] A IS intertemporal, que representa a dinâmica da Demanda Agregada em modelos estruturais que visem avaliar a política monetária, pode ter diferentes formatos dependendo das hipóteses que são feitas a respeito da estrutura da economia. Neste trabalho buscou-se modelar as diferentes hipóteses, tais como formação de hábito de um e dois períodos, de maneira independente da política monetária e testar seu ajuste aos dados. Os resultados indicam que não só é importante introduzir defasagens do hiato do produto na regressão (tanto para aumentar seu poder de explicação quanto para retirar a autocorrelação dos resíduos), como que a taxa de juros só consegue ter coeficiente significantemente diferente de zero se for incluída na regressão a curva de juros nominais futuros. Entretanto, tais resultados são viesados pela amostra escolhida, um período que apresentou uma série de taxa de juros com indícios de não-estacionariedade. / [en] The intertemporal IS equation, which replicate de dynamics of Agregate Demand in structural models that aim to evaluate monetary policy, might take different shapes depending on the assumptions made on the structure of the economy underlying it. In the present work were modeled different hypothesis about the economy, such as habit formation of one and two periods, independent of monetary policy and tested the fit of such equations to the observed data. The results indicate that not only it is important to introduce lags of the output gap in the regression (in order to both elevate its explaining power and to retrieve any autocorrelation of the residuals), and that interest rates can only have a coefficient significantly different from zero if an nominal yield curve is also included. But these results are biased by the time sample used, in which the interest rate were repeatedly raised, and therefore the series suggest some signs of non-stationarity, which may have had some effect in the results.

Testam-se quatro utilidades com o formato S das curvas de saturação - gama, logística, Cauchy e Cauchy modificada - no modelo básico de apreçamento de ativos de Lucas, com séries temporais do mercado americano. Estabelecendo-se um parâmetro que acompanha o nível de consumo per capita , constata-se que todas resolvem o chamado riskfree puzzle. A gama e a Cauchy modificada saem-se melhor no apreçamento dos 25 ativos do portfolio de Fama e French e esta última é eleita a vencedora, pelas suas propriedades assintóticas e por apresentar coeficiente médio (no sentido cross-section) de aversão relativa ao risco na faixa considerada normal (entre 0 e 5). A Cauchy modificada regulariza a utilidade de Constantinides-Cochrane-Campbel, de formação de hábito, permitindo que o trecho abaixo do consumo habitual seja usado, com isso dispensando o uso de truques para impedir que o consumo suavizado ultrapasse o real. Constatou-se a manutenção daquele coeficiente médio dentro da faixa normal, em um nível pouco abaixo do americano, no caso do mercado brasileiro. Nesse sentido de média crosssection, poderia-se dizer que a utilidade aqui proposta resolve o chamado equity premium puzzle. / Four S-shaped utility functions are tested - gamma, logistic, Cauchy and modified Cauchy - on Lucas asset pricing model with American market time series. Establishing a parameter that follows the level of the per capita consumption, it is shown that all of them solve the so called risk free puzzle. The gamma utility and the modified Cauchy are the ones with better pricing power with respect to Fama and French\'s 25 book-to-market portfolio and the last one is elected the winner, for its asymptotic properties and for exhibiting mean (in the cross-section sense) relative risk aversion coefficient inside the accepted normal range (between 0 and 5). The modified Cauchy utility regularizes the habit-formation Constantinides-Cochrane-Campbel utility function, allowing the usage of the stretch below the habit consumption level, thus doing without the need of tricks to forbid the smoothed consumption series from outgrowing the real one. In the Brazilian market, the mean relative risk aversion coefficient also remains inside the acceptable region, on a slightly lower level. In this mean cross-section sense, it might be possible to state that the utility here proposed solves the equity premium puzzle.

Testam-se quatro utilidades com o formato S das curvas de saturação - gama, logística, Cauchy e Cauchy modificada - no modelo básico de apreçamento de ativos de Lucas, com séries temporais do mercado americano. Estabelecendo-se um parâmetro que acompanha o nível de consumo per capita , constata-se que todas resolvem o chamado riskfree puzzle. A gama e a Cauchy modificada saem-se melhor no apreçamento dos 25 ativos do portfolio de Fama e French e esta última é eleita a vencedora, pelas suas propriedades assintóticas e por apresentar coeficiente médio (no sentido cross-section) de aversão relativa ao risco na faixa considerada normal (entre 0 e 5). A Cauchy modificada regulariza a utilidade de Constantinides-Cochrane-Campbel, de formação de hábito, permitindo que o trecho abaixo do consumo habitual seja usado, com isso dispensando o uso de truques para impedir que o consumo suavizado ultrapasse o real. Constatou-se a manutenção daquele coeficiente médio dentro da faixa normal, em um nível pouco abaixo do americano, no caso do mercado brasileiro. Nesse sentido de média crosssection, poderia-se dizer que a utilidade aqui proposta resolve o chamado equity premium puzzle. / Four S-shaped utility functions are tested - gamma, logistic, Cauchy and modified Cauchy - on Lucas asset pricing model with American market time series. Establishing a parameter that follows the level of the per capita consumption, it is shown that all of them solve the so called risk free puzzle. The gamma utility and the modified Cauchy are the ones with better pricing power with respect to Fama and French\'s 25 book-to-market portfolio and the last one is elected the winner, for its asymptotic properties and for exhibiting mean (in the cross-section sense) relative risk aversion coefficient inside the accepted normal range (between 0 and 5). The modified Cauchy utility regularizes the habit-formation Constantinides-Cochrane-Campbel utility function, allowing the usage of the stretch below the habit consumption level, thus doing without the need of tricks to forbid the smoothed consumption series from outgrowing the real one. In the Brazilian market, the mean relative risk aversion coefficient also remains inside the acceptable region, on a slightly lower level. In this mean cross-section sense, it might be possible to state that the utility here proposed solves the equity premium puzzle.

Assume the model is a closed economy, and the shock is from technology progress. This research, based on a real business cycle model, explores the government¡¦s optimal taxation on consumption and labor income under the condition that representative agent¡¦s utility function has consumption externalities as well as leisure externalities. In the following, by changing the value (namely, by setting the consumption and leisure externalities parameter as either positive or negative), this research examines cyclical property of optimal taxation in terms of four situations occurred. The results indicate that, when labor income taxation in the economy is a constant, consumption externalities parameter is negative, leisure externalities parameter is positive, then the consumption taxation is countercyclical at this time; at other times the consumption taxation is procyclical. On the other hand, suppose consumption taxation is a constant, consumption externalities parameter is negative, leisure externalities parameter is positive, or both consumption and leisure externalities parameter are negative, then labor income taxation is countercyclical at this time; at other times the labor income taxation is procyclical.

Understanding the Equity Risk Premium (ERP) and the factors affecting it is cardinal to financial economics, particularly to equity research analysts, domestic and international institutional investors and financial economist. Since the seminal work of Mehra and Prescott (1985) there has been an exponential rise in the research explaining the reasons for ERP puzzle. This review, systematically, investigates the literature related to ERP in four key dimensions. The first dimension is regarding the issues related to different techniques of estimating the ERP. The second dimension is regarding the studies that explain the reasons of existence of the ERP puzzle by making modifications to the preference structures. The third is regarding the macroeconomic variables that help in predicting ERP and the fourth deals with studies that are conducted in the international context. In addition to this, this review meticulously captures some important limitations of the existing literature regarding the estimation of ERP and identifies the domestic and international determinants of ERP, in particular the UK ERP and proposes novel future directions of research. These future research directions have two important implications for my PhD. The first is the academic contribution that predominantly comes from methodological contribution of estimating the ERP. The second is the practical contribution that comes mainly from identifying the unique set of variables (UK domestic and international), which are of prime importance to the domestic and foreign institutional investors because of the financial crisis of 2008-2009 and which should affect the UK ERP.

This dissertation consists of three essays on monetary economics. The first two essays have a focus on the zero lower bound on the nominal interest rate (ZLB) and the Great Recession. In the first essay, I investigate optimal discretionary monetary policy under the ZLB in the case of a distorted steady state due to monopoly and taxation. I find that the central bank in a more distorted economy would cut the interest rate less aggressively under a particular adverse demand shock. This occurs because the ZLB is less likely to bind and the economy escapes from the ZLB sooner. In addition, I show that the conventional linear-quadratic method is not accurate when the ZLB binds. In the second essay, I model the role of subprime lending, deleveraging and an incomplete financial market in driving an economy to the liquidity trap with binding ZLB. There are two key features that differentiate my work from the current literature of deleveraging and the ZLB. First, I endogenize the debt limit of borrowing-constrained households by tying it to the market value of collateral assets. Second and more importantly, I allow for subprime lending. I am able to show that the second feature drives the economy to the ZLB more likely under an adverse shock to the credit market. When the ZLB binds, a great recession emerges with a free fall in output and the price level, mostly due to the Fisherian debt deflation that puts more debt burden on the borrowers. The third essay examines the role of habit formation in solving the persistence problem - output response is transient and not hump-shaped under a monetary shock - in the conventional state dependent pricing model. Intuitively, incorporating habit formation makes consumers less aggressive in spending under a shock, resulting in more persistent response of output. With a moderate habit formation, I am able to show that the model produces hump-shaped and very persistent response of output under a monetary growth shock.