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The Habit Persistence Hypothesis: Empirical Evidence from Jamaica

Oluwafemi Bamikole

MPRA Paper from University Library of Munich, Germany

Abstract: This paper seeks to empirically verify if the habit persistence phenomenon holds in the Jamaican economy. The results of the GMM time series estimation show the existence of habit formation by Jamaican consumers. Past consumption habits affect the growth rate of consumption, consequently in order to build the confidence of consumers in the Jamaican economy, the inflation rate, foreign and domestic interest rates have to be moderately adjusted to encourage good consumption habits.

Keywords: Habit persistence; GMM; consumption growth; Jamaica (search for similar items in EconPapers)
JEL-codes: E2 E21 (search for similar items in EconPapers)
Date: 2013-05-10
New Economics Papers: this item is included in nep-mac and nep-pke
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