Consumer Durables and Inertial Behavior: Estimation and Aggregation of (S,s) Rules / Orazio P. Attanasio.

By:

Attanasio, Orazio P

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w5282.Publication details: Cambridge, Mass. National Bureau of Economic Research 1995.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: This paper presents an (S,s) model for automobile consumption and estimates it using a data set of US households. The model allows for unobserved heterogeneity in both the target level and the band width, takes into account the possibility of a zero desired level, constrains the band to be non negative and allows asymmetric bands. The model is estimated on a novel data set which contains information on both stock values and automobile expenditure for a large number of households observed over a period of a year. The (S,s) rule is specified in terms of the ratio of car stock to non durables. The shortcuts usually employed in the empirical literature on (S,s) rules can be avoided thanks to the richness of the data set and the rigorous specification of the stochastic model. Having estimated the model and considered `goodness of fit' measures, aggregation issues are considered. First, the paper presents a number of negative results. Then, several simulations aimed at evaluating the effects induced by inertial behavior on aggregate dynamics are considered.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w5282 (Browse shelf(Opens below))	Not For Loan

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September 1995.

This paper presents an (S,s) model for automobile consumption and estimates it using a data set of US households. The model allows for unobserved heterogeneity in both the target level and the band width, takes into account the possibility of a zero desired level, constrains the band to be non negative and allows asymmetric bands. The model is estimated on a novel data set which contains information on both stock values and automobile expenditure for a large number of households observed over a period of a year. The (S,s) rule is specified in terms of the ratio of car stock to non durables. The shortcuts usually employed in the empirical literature on (S,s) rules can be avoided thanks to the richness of the data set and the rigorous specification of the stochastic model. Having estimated the model and considered `goodness of fit' measures, aggregation issues are considered. First, the paper presents a number of negative results. Then, several simulations aimed at evaluating the effects induced by inertial behavior on aggregate dynamics are considered.