An Intertemporal Model Of Consumption An Islamic Economics
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Ali Hossein Ostadzad |
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Abstract: (13502 Views) |
Discussion
of consumer behavior is important to the economy, particularly in the Islamic
economy. In this paper intertemporal consumption theory in the Islamic economic framework has
been developed. Beginning,
according to the Hadith and the framework of intertemporal consumption
theory, it was concluded that the utility function of individual Muslims in addition of
consumption depend on the
charity. According to the budget constraints
of individual Muslim, one fifth
of the savings should
be paid in khoms (1/5 of Savings). In this paper khoms is
intended. Most orders in Islam exist that
prevent of excesses and wastage. We optimized utility
function according to budget constraint for the
individual Muslims. After solving the model and according to the obtained equations,
the optimal path of consumption and optimal path of charity are plotted over the time. Optimal routes
based on the values of zero interest rates and interest rates of 1% is
plotted. Result was obtained with a zero interest
rate that optimal consumption
will be constant over
time. According to the equations that calculated, consumption and charity in any
given time dependent only to the present value of lifetime income and don’t dependent to the
other variables such as prior
consumption or charity.
Also Note that
the optimal consumption path is independent of the charity and also the
optimal path of charity is independent of the
consumption. The optimal paths of
consumption and the charity only dependent to present value of
income. With analysis on the present value of income
variable have showed that the increase in total income only move up
the optimal path of consumption and charity
and does not change slope of
path. All graphs in this study plotted with
Matlab software. |
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Keywords: : Optimal allocation of consumption between periods, Virtue, Islamic economic, One fifth, Charity |
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Full-Text [PDF 763 kb]
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Article type: Research |
Subject:
General Received: 2013/10/22 | Accepted: 2015/11/29 | Published: 2015/11/29
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