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Rational Habit Modification in Consumption: the Role of Durables and Credit


  • Messinis, G.


Since Brown (1952), standard habit formation models of consumption have exclusively focused on non-durables and services expenditure, and have assumed that the depreciation of the habit stock is a linear, univariate process. This paper builds on Ermini (1997) to dispense with these two assumptions and arrive at two alternative models of habit modification.

Suggested Citation

  • Messinis, G., 1999. "Rational Habit Modification in Consumption: the Role of Durables and Credit," Department of Economics - Working Papers Series 681, The University of Melbourne.
  • Handle: RePEc:mlb:wpaper:681

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    References listed on IDEAS

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    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment


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