Fluctuations In Consumer Durables Expenditure And Fixed Investment of Korea
This paper examines time series fluctuations of consumer durables expenditure and Fixed investment. Empirical Studies in the past have typically found that fluctuations in this expenditure series are inconsistent with the standard framework of utility or profit maximization. As a result, the Sources and patterns of the volatility of the series have remained largely unexplained. This paper attempts to provide an alternative description of the series, by exploiting time series implications of the stock adjustment process. A simple stock adjustment identity implies that purchases in durable goods should exhibit strong reversion over time, and that the reversion is the primary source of the volatility in durables expenditure series. Empirical results of the paper support this hypothesis. [E27]
Volume (Year): 13 (1999)
Issue (Month): 3 ()
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- Caballero, R.J., 1990.
"Durable Goods: An Explanation For Their Slow Adjustment,"
1990_49, Columbia University, Department of Economics.
- Caballero, Ricardo J, 1993. "Durable Goods: An Explanation for Their Slow Adjustment," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 351-84, April.
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"Expenditure On Durable Goods: A Case For Slow Adjustment,"
1989_21, Columbia University, Department of Economics.
- Caballero, Ricardo J, 1990. "Expenditure on Durable Goods: A Case for Slow Adjustment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 727-43, August.
- Mankiw, N. Gregory, 1982. "Hall's consumption hypothesis and durable goods," Journal of Monetary Economics, Elsevier, vol. 10(3), pages 417-425.
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