Consumer Durables and the Real Interest Rate / N. Gregory Mankiw.

Format:

Book

Author/Creator:

Mankiw, N. Gregory.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1148.

NBER working paper series no. w1148

Language:

English

Subjects (All):

Interest rates--Mathematical models.

Interest rates.

Consumption (Economics)--Mathematical models.

Consumption (Economics).

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1983.

Cambridge, Mass. : National Bureau of Economic Research, 1983.

Summary:

One important channel through which real interest rates affect aggregate demand is consumer expenditure on durable goods. This paper examines empirically the link between interest rates and consumer durables. Solving for the decision rule relating income and interest rates to consumer demand is an intractable task. This paper avoids this problem by examining the first-order conditions necessary for maximization by the representative consumer. Structural parameters of there presentative utility function are thus recovered. The estimated model suggests that expenditure on consumer durables is far more sensitive to changes in the interest rate than is expenditure on nondurables and services.

Notes:

Print version record

June 1983.