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Durable Goods: An Explanation for Their Slow Adjustment

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  • Caballero, Ricardo J

Abstract

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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  • Caballero, Ricardo J, 1993. "Durable Goods: An Explanation for Their Slow Adjustment," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 351-384, April.
  • Handle: RePEc:ucp:jpolec:v:101:y:1993:i:2:p:351-84
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    References listed on IDEAS

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    1. Ricardo J. Caballero, 1990. "Expenditure on Durable Goods: A Case for Slow Adjustment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 727-743.
    2. Avner Bar-Ilan & Alan S. Blinder, 1988. "The Life Cycle Permanent-Income Model and Consumer Durables," Annals of Economics and Statistics, GENES, issue 9, pages 71-91.
    3. Guiseppe Bertola & Ricardo J. Caballero, 1994. "Irreversibility and Aggregate Investment," Review of Economic Studies, Oxford University Press, vol. 61(2), pages 223-246.
    4. Bernanke, Ben, 1985. "Adjustment costs, durables, and aggregate consumption," Journal of Monetary Economics, Elsevier, vol. 15(1), pages 41-68, January.
    5. Alan S. Blinder, 1981. "Retail Inventory Behavior and Business Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 12(2), pages 443-520.
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