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Identifying the depreciation rate of durables from marginal spending responses

Author

Listed:
  • Jin Cao
  • Chao Cui
  • Valeriya Dinger
  • Martin B. Holm
  • Shulong Kang

Abstract

This paper presents a novel 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 2008-2009. The marginal spending response is 0.40. Durable goods make up about 45% of this marginal spending response. 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 0.16.

Suggested Citation

  • Jin Cao & Chao Cui & Valeriya Dinger & Martin B. Holm & Shulong Kang, 2022. "Identifying the depreciation rate of durables from marginal spending responses," Working Paper 2022/1, Norges Bank.
    • Handle: RePEc:bno:worpap:2022_1
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    File URL: https://hdl.handle.net/11250/2978669
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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

    Keywords

    Consumption; Durables; Monetary Policy;
    All these keywords.

    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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