Understanding the costs of consumer durable adjustments

Michio Suzuki

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

This article examines whether adjustment frictions help account for the patterns of household consumption expenditures observed in the Consumer Expenditure Survey, namely, that the variance of log durable expenditure is four times larger than that of log nondurable expenditure for annual data and this gap substantially widens for quarterly data. Estimating a structural model of household consumption with nondurable and durable goods with the simulated method of moments, I find that the fixed costs associated with durable adjustments are important in matching the cross-sectional moments. Using the estimated model, I also examine the response of nondurable and durable expenditures to income shocks.

Original languageEnglish
Pages (from-to)1561-1573
Number of pages13
JournalEconomic Inquiry
Volume54
Issue number3
DOIs
Publication statusPublished - 2016 Jul 1
Externally publishedYes

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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