Cyclicality and Durability: Evidence from U.S. Consumers' Expenditure

Cyclicality and Durability: Evidence from U.s. Consumers’ Expenditure

In this paper three hypotheses concerning the cyclicality of U.S. consumers’ expenditure are proposed. These hypotheses are based upon the distinction between expenditure on durable and non-durable goods. It is argued that durability will lead to increased cyclical sensitivity and that this increased cyclicality will be of an asymmetric nature. The asymmetric adjustment will be of the form of d...

Understanding Consumption Smoothing: Evidence from the US Consumer Expenditure Data∗

Consumption models with endogenous debt constraints differ from standard incomplete markets models in their predictions about an individual household’s ability to smooth consumption across time and states of the world. In this paper we develop these differences, both theoretically and quantitatively. We then use data from the US Consumer Expenditure Survey (CE) to assess along which dimensions ...

Corporate Retentions and Consumers’ Expenditure

Corporate retained profits have well-determined effects on both total and non-durable consumers’ expenditure, with coefficients which do not differ significantly from those on disposable income in a standard consumption function; the effects also appear in a life-cycle model which excludes disposable income. Retentions convey no useful information about future values of the other arguments of e...

Aggregate Consumers' Expenditure and Income

UK Consumers' Expenditure over 40 Years

Using quarterly data for the last four decades, we test a number of traditional assumptions about aggregate consumer behaviour in the UK, with regard to the order of integration of the time series, the income elasticity of consumption and the stability of the parameters of the consumption function. In all cases, modification of these assumptions now appears to be necessary. JEL Classification: E21