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Durable Goods Cycles

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  • Andrew Caplin
  • John Leahy

Abstract

We show that a straight forward approximation of the distribution of durable goods holdings gives rise to a tractable equilibrium (S,s) model of durable demand. We analyze both competitive and monopoly supply. We show that equilibrium interactions lead to elongated impulse responses in demand, to procyclical markups in response to demand shocks, and to countercyclical markups in response to cost shocks.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 6987.

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Date of creation: Feb 1999
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Handle: RePEc:nbr:nberwo:6987

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Citations

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Cited by:
  1. Christopher L. House & Jing Zhang, 2012. "Layoffs, Lemons and Temps," NBER Working Papers 17962, National Bureau of Economic Research, Inc.
  2. Christopher L. House & John V. Leahy, 2004. "An sS Model with Adverse Selection," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(3), pages 581-614, June.
  3. Nicholas Bloom, 2000. "A Generalised Model of Investment under Uncertainty: Aggregation and Estimation," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 1505, Econometric Society.
  4. Ennio Stacchetti & Dmitriy Stolyarov, 2004. "Obsolescence of Durable Goods and Optimal Consumption," Econometric Society 2004 North American Summer Meetings, Econometric Society 120, Econometric Society.
  5. Jerome Adda & Russell Cooper, 2000. "The Dynamics of Car Sales: A Discrete Choice Approach," NBER Working Papers 7785, National Bureau of Economic Research, Inc.
  6. Andrew Caplin & John Leahy, 2004. "How Important Is Discrete Adjustment in Aggregate Fluctuations?," NBER Chapters, in: Growth and Productivity in East Asia, NBER-East Asia Seminar on Economics, Volume 13, pages 351-376 National Bureau of Economic Research, Inc.

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