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Koichiro Iwamoto
''Habit formation in household consumption: evidence from Japanese panel data''
( 2013, Vol. 33 No.1 )
Habit formation in consumption has important implications for the effects of macroeconomic policies. Using micro data from the Japanese Panel Survey of Consumers (JPSC) for the period 1998-2004, an Euler equation à la Dynan (2000) allowing for time-nonseparablity in consumer preferences is estimated. In contrast to previous, macro data-based studies on consumption in Japan, the estimates yield no evidence of habit formation and appear consistent with durability in consumption.
Keywords: household consumption, habit formation, panel data
JEL: D1 - Household Behavior: General
E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data)
Manuscript Received : May 13 2011 Manuscript Accepted : Feb 08 2013

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