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Durable Goods: An Explanation for Their Slow Adjustment Author info | Abstract | Publisher info | Download info | Related research | Statistics Ricardo J. Caballero
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Aggregate expenditure on durable goods responds too slowly to wealth and other aggregate innovations to be consistent with the simplest frictionless version of PIH (permanent income hypothesis). In this paper I present a model of aggregate expenditure on durab1es that builds up from the lumpy nature of microeconomic purchases, and provide evidence supporting its contribution to the resolution of the ?slowness? puzzle. The paper also contains several new results on the problem of dynamic aggregation of stochastically heterogeneous units. In particular, I provide a simple characterization of the effects of heterogeneity and microeconomic lumpiness on aggregate dynamics.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
3748.
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Date of creation: Jun 1991Date of revision:
Publication status: published as Journal of Political Economy, April 1993Handle: RePEc:nbr:nberwo:3748Note: EFGContact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A. Phone: 617-868-3900 Email: Web page: http://www.nber.org More information through EDIRC
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Ricardo J. Caballero & Eduardo M.R.A. Engel, 1996.
"Explaining Investment Dynamics in U.S. Manufacturing: A Generalized (S,s) Approach ,"
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Caballero, Ricardo J, 1995.
"Near-Rationality, Heterogeneity, and Aggregate Consumption ,"
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John V. Leahy & Joseph Zeira, 2000.
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