Measuring Intertemporal Substitution: The Role of Durable Goods

Masao Ogaki () and Carmen Reinhart ()

RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: As pointed out by Hall (1988), intertemporal substitution by consumers is a central element of many modern macroeconomic and international models. We argue that Hall's estimator or the IES is downward biased because the intra-temporal substitution between nondurable consumption goods and durable consumption goods is ignored and because the changes in real interest rates affect user costs of durable goods.

Keywords: STATISTICS; EVALUATION (search for similar items in EconPapers)
JEL-codes: C13 (search for similar items in EconPapers)
Date: Written 1995
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Journal Article: Measuring Intertemporal Substitution: The Role of Durable Goods (1998)
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