Consumer durables and the marginal propensity to consume out of permanent income shocks |
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| Authors: | Mario Padula |
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| Institution: | University of Salerno and CSEF, Via Ponte don Melillo, 84084 Fisciano, Italy |
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| Abstract: | This paper derives and estimates a model in which the utility of durable and non-durable consumption is allowed to be non-separable and individuals face a convex adjustment cost for the purchase of a new durable good. Panel data on subjective expectations allow us to identify income shocks and estimate the marginal propensity to consume out of permanent income shocks. |
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| Keywords: | Durable goods Intertemporal substitution Subjective expectations |
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