The Life Cycle Permanent-Income Model and Consumer Durables
AbstractThis paper presents an extension of the life cycle permanent-income model of consumption to the case of a durable good whose purchase involves limpy transactions costs. By integrating the advancement/postponement decision in the individual's analysis, the implications of the model are different in some respects from those of standard consumption theory. Using explicit aggregation it is shown that expenditures on durables display very large short-run elasticity to changes in permanent income. Empirical tests generally produce results that are in line with the theory.
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Bibliographic InfoArticle provided by ENSAE in its journal Annals of Economics and Statistics.
Volume (Year): (1988)
Issue (Month): 9 ()
Other versions of this item:
- Avner Bar-Ilan & Alan S. Blinder, 1987. "The Life-Cycle Permanent-Income Model and Consumer Durables," NBER Working Papers 2149, National Bureau of Economic Research, Inc.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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