Excess Smoothness and Durable Goods: Evidence from Subjective Expectations Data

This paper derives and estimates a model where durable and non-durable consumption are allowed to be non-separable in utility and individuals face a convex adjustment cost whenever they want to purchase a new durable good. Subjective expectations data allow to identify and estimate the marginal propensity to consume out of permanent shocks, which is a key parameter for the understanding of the excess smoothness puzzle and for policy purposes.

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Year of publication:	2000-03-01
Authors:	Padula, Mario
Institutions:	Centro Studi di Economia e Finanza (CSEF)
Subject:	Durable Goods \| Intertemporal Substitution \| Excess Smoothness \| Subjective Expectations

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Extent:	application/pdf
Series:	CSEF Working Papers.
Type of publication:	Book / Working Paper
Classification:	D91 - Intertemporal Consumer Choice; Life Cycle Models and Saving
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005802071