Good evening,
I am looking for some examples in literature of a specific type of non-separable Utility function.
The image is attached to this post, do you have any reference?
Thanks in advance
This is a modified version of GHH preferences, used widely in open macro models. In particular, Mendonza (1995) uses exactly this preference to study the role of terms of trade in the business cycles, but there C_t is a bundle of consumption goods and the author uses leisure rather than hours worked (l = 1 - h). The reference is:
Mendoza, Enrique, “The Terms of Trade, the Real Exchange Rate, and Economic Fluctuations,”
International Economic Review 36, February 1995, 101-137.
Also check chapter 4, 6 and 7 of Martin Uribe and Stephanie Schmitt-Grohé book “Open Economy Macroeconomics” for further details and references of GHH preferences. Chapter 7 in their book shows Mendonza (1995) model in a more intuitive format.
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