Habits and Durability in Consumption, and the Effects of Tariff Protection
AbstractSome recent empirical findings are used to motivate employing a model in which consumption exhibits durability, and habits develop over the flow of services provided by them, in order to study the effects of tariff protection on the current account. Durability leads to adjacent substitutability in consumption, while habits are assumed to lead to adjacent complementarity. If durability effects are dominant in the short run, and habit effects in the long run, then tariffs will lead to a current account surplus, which will be followed by a deficit. In the opposite case a deficit will be followed by a surplus.
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Bibliographic InfoPaper provided by York University, Department of Economics in its series Working Papers with number 1996_02.
Length: 19 pages
Date of creation: Feb 1996
Date of revision:
Habits; Durability in Consumption; Tariffs; Current Account.;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
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