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Deep versus superficial habit: It’s all in the persistence

Bayesian estimation is employed to investigate whether deep as opposed to superficial habit improves the fit of a dynamic stochastic general equilibrium model. If the stock of superficial habit features the additional persistence typical of deep habit, the two specifications are virtually as good. Introducing deep habit in public consumption does not improve the model’s fit.
Year of publication:
2014-09
Authors: Cantore, Cristiano ; Levine, Paul ; Melina, Giovanni
Institutions: School of Economics, University of Surrey
Extent:
application/pdf
Series:
Type of publication: Book / Working Paper
Notes:
Number 0714 35 pages
Classification: E30 - Prices, Business Fluctuations, and Cycles. General ; E62 - Fiscal Policy; Public Expenditures, Investment, and Finance; Taxation
Source:
Persistent link: https://www.econbiz.de/10011141034
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