We consider a broad class of intertemporal economic problems and characterize the short-run and long-run responses of the demand for a good to a permanent increase in its market price. Depending on the interplay between self-productivity and time discounting, we show that dynamic substitution effects can generate price elasticities of opposite signs in the short run and in the long run.
Dragone, Davide, and Paolo Vanin.
"Substitution Effects in Intertemporal Problems."
American Economic Journal: Microeconomics,
Consumer Economics: Theory
Intertemporal Household Choice; Life Cycle Models and Saving
Taxation, Subsidies, and Revenue: General
Time Allocation and Labor Supply
Human Capital; Skills; Occupational Choice; Labor Productivity