Internal and external habits and news-driven business cycles
MPRA Paper from University Library of Munich, Germany
In many applications of habit persistence to macroeconomics, it is of little significance whether habits are internal or external. In this paper, it is shown that the distinction between internal and external habits is important in a situation wherein a shock is news about the future. An internal habit can be a source of news-driven business cycles, positive comovement in consumption, labor, investment, and output from the news about the future, whereas an external habit cannot.
Keywords: Habit persistence; internal habit; external habit; news-driven business cycles (search for similar items in EconPapers)
JEL-codes: E32 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
https://mpra.ub.uni-muenchen.de/12550/1/MPRA_paper_12550.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/19056/1/MPRA_paper_19056.pdf revised version (application/pdf)
Journal Article: Internal and external habits and news-driven business cycles (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:12550
Access Statistics for this paper
More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().