Durable Goods Cycles

Andrew Caplin () and John Leahy ()

No 6987, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We show that a straight forward approximation of the distribution of durable goods holdings gives rise to a tractable equilibrium (S,s) model of durable demand. We analyze both competitive and monopoly supply. We show that equilibrium interactions lead to elongated impulse responses in demand, to procyclical markups in response to demand shocks, and to countercyclical markups in response to cost shocks.

JEL-codes: E21 E32 (search for similar items in EconPapers)
Date: 1999-02
Note: EFG
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