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Intertemporal substitution and durable goods: long-run data

Reinhart, Carmen and Ogaki, Masao (1998): Intertemporal substitution and durable goods: long-run data.

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Abstract

In this paper, we use long-run annual data to estimate the intertemporal elasticity of substitution while accounting for the intra-temporal substitution between nondurable consumption goods and durable consumption goods. We apply a two-step procedure that combines a cointegration approach to preference parameter estimation with Generalized Method of Moments.

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