We develop a demand model for goods that are subject to habit formation. We show that consumption plans of forward-looking individuals depend on preferences, current period prices, and individual beliefs about the evolution of future prices. Moreover, an increase in price uncertainty reduces...

We consider expectations of the form E[logy|x] = Σ_j=1-super-d α_j log x_j as a good starting point for a more general analysis. We show why this naturally leads to the following flexible functional form: E[y|x] = f(Σ_j=1-super-dh_j(x_j)), where f(ċ) and the h_j(ċ)'s are estimated by cubic splines....

The authors reply to the comment by D. R. Kamerschen and J. Park on their 1988 paper published in this Review. They find that the econometric point raised by these authors is flawed, because differences in model structure and data are ignored. In particular, the importance of materials input in...

The relevance of imperfect competition for models of economic fluctuations has received increased attention from researchers in both macroeconomics and industrial organization. The authors outline a new methodology for estimating industry markups of price over marginal cost and the influence of...