Durable Goods: An Explanation for Their Slow Adjustment
Aggregate expenditure on durables responds only slowly to wealth and other aggregate innovations. In this paper, the author develops new results on the problem of dynamic aggregation of stochastically heterogeneous units, which help to characterize the connection between microeconomic intermittent behavior and aggregate dynamics. Using these results and splitting postwar U.S. aggregate durable purchases into different subcategories and time periods, the author provides further support for the view that lumpy microeconomi c purchases play an important role in explaining the time-series behavior of aggregate expenditure on durable goods. Copyright 1993 by University of Chicago Press.
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