Habits and Durability in Consumption, and the Effects of Tariff Protection

Arman Mansoorian and Simon Neaime

Open Economies Review, 2000, vol. 11, issue 3, 195-204

Abstract: Some 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. Copyright Kluwer Academic Publishers 2000

Keywords: habits; durability in consumption; tariffs; current account (search for similar items in EconPapers)
Date: 2000
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Working Paper: Habits and Durability in Consumption, and the Effects of Tariff Protection (1996)
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DOI: 10.1023/A:1008333322391

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