Durability and Asymmetry in UK Consumers' Expenditure
Cook et al. (1998) have recently proposed the hypothesis of a positive relationship between the durability of consumers' expenditure and the asymmetric behaviour it exhibits. Some support was found for this hypothesis via the application of Sichel's (1993) univariate tests of business cycle asymmetry to quarterly data on the components of UK consumers' expenditure. In this paper this hypothesis is revisited, with the original analysis extended in a number of ways. First, the hypothesis is examined using annual data over a longer span than the original study, potentially allowing more business cycles to be captured. Secondly the effects of alternative means of detrending, a prerequisite for the analysis, are considered. Using durable, non-durable and total consumption data for the UK, the 'durability-asymmetry' hypothesis is found to hold. It is also found that a previously noted aggregation paradox disappears, but a new temporal aggregation paradox is uncovered. Significantly, the manner in which the data are detrended is also seen to influence results.
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Volume (Year): 14 (2000)
Issue (Month): 1 ()
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