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Durable Purchases over the Later Life Cycle

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Author Info

  • Martin Browning

    (University of Oxford and Institute for Fiscal Studies)

  • Thomas Crossley

    ()
    (Koc University, Institute for Fiscal Studies and University of Cambridge)

  • Melanie Lührmann

    (Royal Holloway, University of London and Institute for Fiscal Studies)

Abstract

We investigate the life cycle patterns of households' ’spending on medium value durables. We use panel data on expenditures on appliances and consumer electronics the British Household Panel Study between 1997 and 2008. In cross section, expenditures for appliances and consumer electronics decrease strongly as households age. We show that this is entirely attributable to cohort effects and that when such effects are properly modelled, expenditure on consumer electronics rises with age. We also document important demand effects of household composition, labour supply and health status.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1213.pdf
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Bibliographic Info

Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1213.

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Length: 36 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:koc:wpaper:1213

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Keywords: life cycle model; consumer behaviour; durables.;

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  1. Martin Browning & Thomas F. Crossley, 2009. "Shocks, Stocks, and Socks: Smoothing Consumption Over a Temporary Income Loss," Journal of the European Economic Association, MIT Press, vol. 7(6), pages 1169-1192, December.
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  3. Sarah Smith, 2006. "The retirement-consumption puzzle and involuntary early retirement: Evidence from the British Household Panel Survey," The Centre for Market and Public Organisation 06/138, Department of Economics, University of Bristol, UK.
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  8. Michael Hurd & Susann Rohwedder, 2004. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," Working Papers wp069, University of Michigan, Michigan Retirement Research Center.
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  12. Michael D. Hurd & Susann Rohwedder, 2006. "Some Answers to the Retirement-Consumption Puzzle," NBER Working Papers 12057, National Bureau of Economic Research, Inc.
  13. Banks, James & Blundell, Richard & Tanner, Sarah, 1998. "Is There a Retirement-Savings Puzzle?," American Economic Review, American Economic Association, vol. 88(4), pages 769-88, September.
  14. Raffaele Miniaci & Chiara Monfardini & Guglielmo Weber, 2003. "Is there a retirement consumption puzzle in Italy?," IFS Working Papers W03/14, Institute for Fiscal Studies.
  15. Shelly Lundberg & Richard Startz & Steven Stillman, 2001. "The Retirement-Consumption Puzzle: A Marital Bargaining Approach," Working Papers 01-04, RAND Corporation Publications Department.
  16. Bar-Ilan, Avner & Blinder, Alan S, 1992. "Consumer Durables: Evidence on the Optimality of Usually Doing Nothing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(2), pages 258-72, May.
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