This paper provides derivations necessary for solving an optimal consumptio
n problem with multiplicative habits and a CRRA 'outer' utility function, e
ither for a microeconomic problem with both labor income risk and rate-of-r
eturn risk, or for a macroeconomic representative agent model. (C) 2000 Els
evier Science S.A. All rights reserved. JEL classification: D91; E21; O40.