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The Consumer Expenditure Function

In: Explorations in Economic Research, Volume 4, number 5

Author

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  • Michael R. Darby

Abstract

A consumer expenditure function which integrates pure consumption and household investment in durable goods is formulated and estimated. Because of reduced reliance on the official classification of commodities as durable or nondurable, a considerable increase in ability to explain consumer expenditures results as compared to multiequation models. Further empirical investigation provides strong evidence that: (1) private sector income is significantly better than disposable personal income for explaining consumer expenditures, (2) the M1 definition of money is similarly superior to both M2 and M3 definitions, and (3) the weight of current income in permanent income is about 10% per annum. Data appendix included.
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Suggested Citation

  • Michael R. Darby, 1977. "The Consumer Expenditure Function," NBER Chapters, in: Explorations in Economic Research, Volume 4, number 5, pages 645-674, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:9106
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    2. Michael R. Darby & Robert Gillingham & John S. Greenlees, 1991. "The Impact Of Government Deficits On Personal And National Saving Rates," Contemporary Economic Policy, Western Economic Association International, vol. 9(4), pages 39-55, October.
    3. William Poole & Robert Eisner & Allen L Sinai & Michael R. Darby, 1989. "Challenges Of Macro Policy In The Open U.S. Economy," Contemporary Economic Policy, Western Economic Association International, vol. 7(1), pages 1-34, January.
    4. James Smith & Michael Ward, 1980. "Asset Accumulation And Family Size," Demography, Springer;Population Association of America (PAA), vol. 17(3), pages 243-260, August.

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