Consumption and saving with habit formation and durability
Abstract
This paper develops a model of precautionary saving with habit formation and durability. Durability offsets the effects of habit formation on both consumption growth and the precautionary premium. Empirical tests of habit formation and durability on consumption growth might exploit their parallel effects on the precautionary premium. © 2002 Elsevier Science B.V. All rights reserved.
Publication Title
Economics Letters
Recommended Citation
Smith, W. (2002). Consumption and saving with habit formation and durability. Economics Letters, 75 (3), 369-375. https://doi.org/10.1016/S0165-1765(02)00012-5
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