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

Cristiano Cantore, Paul Levine () and Giovanni Melina ()

No 714, School of Economics Discussion Papers from School of Economics, University of Surrey

Abstract: 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.

JEL-codes: E30 E62 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2014-09
New Economics Papers: this item is included in nep-dge, nep-ger and nep-mac
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:sur:surrec:0714

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