pakos, michal (2011): Estimating intertemporal and intratemporal substitutions when both income and substitution effects are present: the role of durable goods. Published in: Journal of Business and Economic Statistics , Vol. 29, No. 3 (July 2011): pp. 439-454.
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Homotheticity induces a dramatic statistical bias in the estimates of the intratemporal and intertemporal substitutions. I find potent support in favor of nonhomotheticity in aggregate consumption data, with nondurable goods being necessities and durable goods luxuries. I obtain the intertemporal substitutability negligible (0.04), a magnitude close to Hall’s (1988) original estimate, and the intratemporal substitutability between nondurable goods and service flow from the stock of durable goods small as well (0.18). Despite that, due to the secular decline of the rental cost, the budget share of durable goods appears trendless.
|Item Type:||MPRA Paper|
|Original Title:||Estimating intertemporal and intratemporal substitutions when both income and substitution effects are present: the role of durable goods|
|English Title:||Estimating Intertemporal and Intratemporal Substitutions When Both Income and Substitution Effects Are Present: The Role of Durable Goods|
|Keywords:||consumption, durable goods, nonhomotheticity, elasticity of substitution, asset pricing|
|Subjects:||C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C51 - Model Construction and Estimation
D - Microeconomics > D9 - Intertemporal Choice and Growth > D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E21 - Consumption; Saving; Wealth
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies
D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles
|Depositing User:||Michal Pakos|
|Date Deposited:||27. Jul 2011 17:51|
|Last Modified:||12. Feb 2013 18:52|
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