Permanent Income, Liquidity, and Adjustments of Automobile Stocks: Evidence from Panel Data
A recent article by Ben Bernanke (1984) tests the rational expectations-permanent income hypothesis using panel data on automobile expenditures. He finds no evidence refuting the hypothesis. This paper incorporates a threshold adjustment process into Bernanke's model. Estimations based on a subset of the data used by Bernanke reveal evidence that resale market imperfections and credit market constraints have important effects on automobile expenditures. Copyright 1991, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
Volume (Year): 106 (1991)
Issue (Month): 1 (February)
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