Intertemporal Substitution and Durable Goods: An Empirical Analysis
AbstractThe hypothesis that large fluctuations in observed quantities are induced by intertemporal substitution is frequently used in modern macroeconomics. One channel through which fluctuations in real rates of return on savings can impact on the economy is via their influence on the purchases of durable goods by consumers. This paper proposes and estimates a model of an optimizing agent who is faced with the problem of allocating intertemporally his consumption of nondurable and durable goods when confronted with a fluctuating rate of return. Expectations are assumed to be formed rationally. The authors' analysis of Canadian data is favorable to this class of models.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 24 (1991)
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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