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Habit Persistence

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Abstract

This article reviews the concept of habit persistence and its application in macroeconomics and finance. Special attention is given to the role of habit persistence in explaining the equity premium puzzle, observed business-cycle fluctuations and inflation dynamics, and in generating a theory of counter-cyclical markups of prices over marginal costs.

This chapter was originally published in The New Palgrave Dictionary of Economics, 2nd edition, 2008. Edited by Steven N. Durlauf and Lawrence E. Blume

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  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Stephanie Schmitt-Grohé & Martin Uribe

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  1. Stephanie Schmitt-Grohé
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  2. Martin Uribe
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    © 2008 The Author(s)

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    Schmitt-Grohé, S., Uribe, M. (2008). Habit Persistence. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95121-5_2191-1

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    • DOI: https://doi.org/10.1057/978-1-349-95121-5_2191-1

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    • Publisher Name: Palgrave Macmillan, London

    • Online ISBN: 978-1-349-95121-5

    • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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