The Intertemporal Allocation of Expenditure on Non-durables, Services, and Durables
AbstractThis paper presents estimates of the parameters of a consumption function for U.S. quarterly, seasonally-unadjusted data on nondurables, services, and durables. The theoretical novelty in the approach the author presents is in the derivation of the consumption function from an underlying many-goods allocation problem. Applying this model with an appropriate estimator to the data, he finds that (1) the (homogeneity) restrictions suggested by theory are not rejected; (2) there is no evidence of excess sensitivity to income; (3) there is no evidence to suggest that agents cannot adjust their durable stocks as they would wish; and (4) the intertemporal substitution elasticity is not well-determined.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 22 (1989)
Issue (Month): 1 (February)
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Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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- Mario Padula, 1999. "Euler Equations and Durable Goods," CSEF Working Papers 30, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- José Alberto Molina Chueca, 1998. "La elasticidad de sustitución intertemporal en el consumo: evidencia empírica en países representativos de la OCDE," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 9, pages 119-131, Junio.
- Gary Wong, 2001. "Towards A More General Approach To Testing The Time Additivity Hypothesis," School of Economics and Finance Discussion Papers and Working Papers Series 098, School of Economics and Finance, Queensland University of Technology.
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