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Durable Purchases over the Later Life Cycle

  • Martin Browning

    (University of Oxford and Institute for Fiscal Studies)

  • Thomas Crossley

    ()

    (Koc University, Institute for Fiscal Studies and University of Cambridge)

  • Melanie Lührmann

    (Royal Holloway, University of London and Institute for Fiscal Studies)

We investigate the life cycle patterns of households' ’spending on medium value durables. We use panel data on expenditures on appliances and consumer electronics the British Household Panel Study between 1997 and 2008. In cross section, expenditures for appliances and consumer electronics decrease strongly as households age. We show that this is entirely attributable to cohort effects and that when such effects are properly modelled, expenditure on consumer electronics rises with age. We also document important demand effects of household composition, labour supply and health status.

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File URL: http://eaf.ku.edu.tr/sites/eaf.ku.edu.tr/files/erf_wp_1213.pdf
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Paper provided by Koc University-TUSIAD Economic Research Forum in its series Koç University-TUSIAD Economic Research Forum Working Papers with number 1213.

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Length: 36 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:koc:wpaper:1213
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  1. Kapteyn, Arie & Alessie, Rob & Lusardi, Annamaria, 2005. "Explaining the wealth holdings of different cohorts: Productivity growth and Social Security," European Economic Review, Elsevier, vol. 49(5), pages 1361-1391, July.
  2. Michael D. Hurd & Susann Rohwedder, 2006. "Some Answers to the Retirement-Consumption Puzzle," NBER Working Papers 12057, National Bureau of Economic Research, Inc.
  3. repec:att:wimass:9722 is not listed on IDEAS
  4. Michael Hurd & Susann Rohwedder, 2003. "The Retirement-Consumption Puzzle: Anticipated and Actual Declines in Spending at Retirement," NBER Working Papers 9586, National Bureau of Economic Research, Inc.
  5. Michael Hurd & Susann Rohwedder, 2005. "Changes in Consumption and Activities at Retirement," DNB Working Papers 039, Netherlands Central Bank, Research Department.
  6. Erich Battistin & Agar Brugiavini & Enrico Rettore & Guglielmo Weber, 2009. "The Retirement Consumption Puzzle: Evidence from a Regression Discontinuity Approach," American Economic Review, American Economic Association, vol. 99(5), pages 2209-26, December.
  7. Pierre-Olivier Gourinchas & Jonathan A. Parker, 1999. "Consumption Over the Life Cycle," NBER Working Papers 7271, National Bureau of Economic Research, Inc.
  8. Angus Deaton & Christina Paxson, 1993. "Intertemporal Choice and Inequality," NBER Working Papers 4328, National Bureau of Economic Research, Inc.
  9. Finkelstein, Amy N. & Luttmer, Erzo F. P. & Notowidigdo, Matthew J., 2009. "Approaches to Estimating the Health State Dependence of the Utility Function," Working Paper Series rwp09-002, Harvard University, John F. Kennedy School of Government.
  10. Banks, James & Blundell, Richard & Tanner, Sarah, 1998. "Is There a Retirement-Savings Puzzle?," American Economic Review, American Economic Association, vol. 88(4), pages 769-88, September.
  11. Grossman, Sanford J & Laroque, Guy, 1990. "Asset Pricing and Optimal Portfolio Choice in the Presence of Illiquid Durable Consumption Goods," Econometrica, Econometric Society, vol. 58(1), pages 25-51, January.
  12. Melanie Lührmann, 2010. "Consumer Expenditures and Home Production at Retirement - New Evidence from Germany," German Economic Review, Verein für Socialpolitik, vol. 11, pages 225-245, 05.
  13. Lundberg, Shelly & Startza, Richard & Stillman, Steven, 2003. "The retirement-consumption puzzle: a marital bargaining approach," Journal of Public Economics, Elsevier, vol. 87(5-6), pages 1199-1218, May.
  14. Sarah Smith, 2006. "The retirement-consumption puzzle and involuntary early retirement: Evidence from the British Household Panel Survey," The Centre for Market and Public Organisation 06/138, Department of Economics, University of Bristol, UK.
  15. repec:cup:cbooks:9780521296762 is not listed on IDEAS
  16. Bar-Ilan, Avner & Blinder, Alan S, 1992. "Consumer Durables: Evidence on the Optimality of Usually Doing Nothing," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 24(2), pages 258-72, May.
  17. Martin Browning & Thomas F. Crossley, 2004. "Shocks, stocks and socks: smoothing consumption over a temporary income loss," CAM Working Papers 2004-05, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
  18. Mark Bils & Peter J. Klenow, 1998. "Using Consumer Theory to Test Competing Business Cycle Models," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 233-261, April.
  19. Raffaele Miniaci & Chiara Monfardini & Guglielmo Weber, 2003. "Is there a retirement consumption puzzle in Italy?," IFS Working Papers W03/14, Institute for Fiscal Studies.
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