Excess Smoothness and Durable Goods: Evidence from Subjective Expectations Data

Mario Padula

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: This paper derives and estimates a model where durable and non-durable consumption are allowed to be non-separable in utility and individuals face a convex adjustment cost whenever they want to purchase a new durable good. Subjective expectations data allow to identify and estimate the marginal propensity to consume out of permanent shocks, which is a key parameter for the understanding of the excess smoothness puzzle and for policy purposes.

Keywords: Durable Goods; Intertemporal Substitution; Excess Smoothness; Subjective Expectations (search for similar items in EconPapers)
JEL-codes: D91 (search for similar items in EconPapers)
Date: 2000-03-01
New Economics Papers: this item is included in nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:38

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