Durable Goods: An Explanation for Their Slow Adjustment / Ricardo J. Caballero.

Format:

Book

Author/Creator:

Caballero, Ricardo J.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3748.

NBER working paper series no. w3748

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Durable Goods

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1991.

Summary:

Aggregate expenditure on durable goods responds too slowly to wealth and other aggregate innovations to be consistent with the simplest frictionless version of PIH (permanent income hypothesis). In this paper I present a model of aggregate expenditure on durab1es that builds up from the lumpy nature of microeconomic purchases, and provide evidence supporting its contribution to the resolution of the ?slowness? puzzle. The paper also contains several new results on the problem of dynamic aggregation of stochastically heterogeneous units. In particular, I provide a simple characterization of the effects of heterogeneity and microeconomic lumpiness on aggregate dynamics.

Notes:

Print version record

June 1991.