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Identifying the Depreciation Rate of Durables from Marginal Spending Responses

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  • JIN CAO
  • CHAO CUI
  • VALERIYA DINGER
  • MARTIN B. HOLM
  • SHULONG KANG

Abstract

This paper presents a new method to estimate the depreciation rate of durable goods using a combination of identified marginal and average spending shares. We apply our method to Chinese spending responses to disposable income changes induced by monetary policy in 2008–09. The marginal total spending response is 0.40. About 46% of this marginal spending response is due to durable goods. By combining this marginal spending share on durables with an average spending share of 14%, we estimate the annual depreciation rate of durables in China to be 0.17.

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  • Jin Cao & Chao Cui & Valeriya Dinger & Martin B. Holm & Shulong Kang, 2025. "Identifying the Depreciation Rate of Durables from Marginal Spending Responses," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 57(1), pages 223-241, February.
    • Handle: RePEc:wly:jmoncb:v:57:y:2025:i:1:p:223-241
    DOI: 10.1111/jmcb.13134
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    Cited by:

    1. Den Haan, Wouter & Sun, Tiancheng, 2024. "The Role of Sell Frictions for Inventories and Business Cycles," CEPR Discussion Papers 19422, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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