For more than a half a decade, the fact that expenditure on durables can be well approximated by a random walk has remained a hidden puzzle, challenging almost any theory in which agents smooth the use of their wealth. This paper shows that once a nonparsimonious approach is used, or lower frequencies of the data are examined, the fact itself disappears; changes in expenditures on durables reveal a degree of reversion consistent with the permanent income hypothesis, although this reversion occurs at a rate significantly slower than what is suggested by a frictionless permanent income hypothesis model. Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 105 (1990) Issue (Month): 3 (August) Pages: 727-43 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
Cited by: (explanations, 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.)
Emilio Fernandez-Corugedo, 2004.
"Consumption Theory,"
Handbooks,
Centre for Central Banking Studies, Bank of England, number 23, December.
[Downloadable!]