ESRI Discussion Paper Series No.264
Food Consumption Expenditure and Habit Formation:
Evidence from Japanese Household Panel Data

Koichiro Iwamoto
Visiting Research Fellow, Economic and Social Research Institute, Cabinet Office, Government of Japan

Abstract

Because habit formation among consumers preference has strong influence on policy effects, it is crucially important for public policy management. In this article, I estimate the Euler equation allowing habit formation based on Dynan (2000), using data from the Japanese Panel Survey of Consumers (JPSC) for the period 2000-2004, and compare my estimation results with those of previous studies. Like Dynan (2000) and Guariglia and Rossi (2002), my estimation results yield no evidence of habit formation. And as Guariglia and Rossi (2002), my results are consistent with the durability of consumption.


Structure of the whole text(PDF-Format 1 File)

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  2. page1
    Abstract
  3. page2
    I. Introduction
  4. page3
    II. Theoretical Framework
  5. page5
    III. Data
  6. page7
    IV. Results of Estimation
  7. page9
    V. Conclusion
  8. page11
    Appendix Results of Estimation by the JPSC Expenditure Category Data
    1. page11
      A1. Habit Formation and Durability of Consumption Goods
    2. page12
      A2. Data
    3. page13
      A3. Estimation Results
    4. page15
      A4. Conclusion
  9. page16
    References
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