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Measuring Intertemporal Substitution : The Role of Durable Goods

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Listed author(s):
  • Ogaki, M
  • Reinhart, C-M

Abstract

As pointed out by Hall (1988), intertemporal substitution by consumers is a central element of many modern macroeconomic and international models. We argue that Hall's estimator or the IES is downward biased because the intra-temporal substitution between nondurable consumption goods and durable consumption goods is ignored and because the changes in real interest rates affect user costs of durable goods.

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Paper provided by University of Rochester - Center for Economic Research (RCER) in its series RCER Working Papers with number 404.

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Length: 27 pages
Date of creation: 1995
Handle: RePEc:roc:rocher:404
Contact details of provider: Postal:
University of Rochester, Center for Economic Research, Department of Economics, Harkness 231 Rochester, New York 14627 U.S.A.

Keywords: STATISTICS ; EVALUATION;

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Find related papers by JEL classification:
  • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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