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. 439454.

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Abstract
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 
Language:  English 
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 > D91  Intertemporal Household 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  Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > 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 
Item ID:  32453 
Depositing User:  Michal Pakos 
Date Deposited:  27. Jul 2011 17:51 
Last Modified:  01. Jan 2016 10:34 
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URI:  https://mpra.ub.unimuenchen.de/id/eprint/32453 