01829cam a22002417 4500001000600000003000500006005001700011008004100028100002100069245015200090260006600242490004100308500001900349520082900368530006101197538007201258538003601330700003001366710004201396830007601438856003701514856003601551w3631NBER20140930032923.0140930s1991 mau||||fs|||| 000 0 eng d1 aFerson, Wayne E.10aHabit Persistence and Durability in Aggregate Consumptionh[electronic resource]:bEmpirical Tests /cWayne E. Ferson, George M. Constantinides. aCambridge, Mass.bNational Bureau of Economic Researchc1991.1 aNBER working paper seriesvno. w3631 aFebruary 1991.3 aHabit persistence in consumption preferences and durability of consumption goods are two hypotheses which imply time-nonseparability in the derived utility for consumption expenditures. We study a simple model with both effects, in which lagged consumption expenditures enter the Euler equation. Habit persistence implies that the coefficients on the lagged expenditures are negative, while durability implies positive coefficients. If both effects are present, then estimating the sign of the coefficients addresses the question as to which of the two effects is dominant. Earlier empirical work on monthly data supported the durability of consumption expenditures. We estimate and test the Euler equation using monthly, quarterly and annual data and find evidence that habit persistence dominates the effect of durability. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web.1 aConstantinides, George M.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w3631.4 uhttp://www.nber.org/papers/w363141uhttp://dx.doi.org/10.3386/w3631