Dynamics of expenditures on durable goods: the role of new-product quality

Fabio Bertolotti, Alessandro Gavazza and Andrea Lanteri

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the role of new-product quality for the dynamics of durable-good expenditures around the Great Recession. We assemble a rich dataset on US new-car markets during 2004–12, combining data on transaction prices with detailed information about vehicles’ technical characteristics. During the recession, a reallocation of expenditures away from high-quality new models accounts for a significant decline in the dispersion of expenditures. In turn, car manufacturers introduced new models of lower quality. The drop in new-model quality persistently depressed the technology embodied in vehicles, and likely contributed to the slow recovery of expenditures.

JEL-codes: E21 E23 E32 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2023-05-01
New Economics Papers: this item is included in nep-tre
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Published in Economic Journal, 1, May, 2023, 133(652), pp. 1641 - 1656. ISSN: 0013-0133

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http://eprints.lse.ac.uk/117851/ Open access version. (application/pdf)

Related works:
Journal Article: Dynamics of Expenditures on Durable Goods: The Role of New-Product Quality (2023)
Working Paper: Dynamics of Expenditures on Durable Goods: the Role of New-Product Quality (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:117851

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