Abstract
This article reviews the concept of habit persistence and its application in macroeconomics and finance. Special attention is given to the role of habit persistence in explaining the equity premium puzzle, observed business-cycle fluctuations and inflation dynamics, and in generating a theory of counter-cyclical markups of prices over marginal costs.
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Schmitt-Grohé, S., Uribe, M. (2018). Habit Persistence. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2191
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DOI: https://doi.org/10.1057/978-1-349-95189-5_2191
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Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
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