Consumer Durables and Inertial Behavior: Estimation and Aggregation of (S,s) Rules / Orazio P. Attanasio.

Format:

Book

Author/Creator:

Attanasio, Orazio P.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5282.

NBER working paper series no. w5282

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Consumer Durables and Inertial Behavior Estimation and Aggregation of

Consumer Durables and Inertial Behavior

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1995.

Summary:

This paper presents an (S,s) model for automobile consumption and estimates it using a data set of US households. The model allows for unobserved heterogeneity in both the target level and the band width, takes into account the possibility of a zero desired level, constrains the band to be non negative and allows asymmetric bands. The model is estimated on a novel data set which contains information on both stock values and automobile expenditure for a large number of households observed over a period of a year. The (S,s) rule is specified in terms of the ratio of car stock to non durables. The shortcuts usually employed in the empirical literature on (S,s) rules can be avoided thanks to the richness of the data set and the rigorous specification of the stochastic model. Having estimated the model and considered `goodness of fit' measures, aggregation issues are considered. First, the paper presents a number of negative results. Then, several simulations aimed at evaluating the effects induced by inertial behavior on aggregate dynamics are considered.

Notes:

Print version record

September 1995.