Modelling consumers' expenditure

Nicola Rossi and Fabio Schiantarelli

European Economic Review, 1982, vol. 17, issue 3, 371-391

Abstract: The purpose of this paper is to model the dynamics of consumers' response to changes in the relevant variables. Wealth and inflation effects on aggregate consumption expenditure are investigated. Real capital losses (or gains) due to inflation are accounted for in providing a more appropriate definition of income in a situation of rising prices. Empirical results for Italy show that, once the dynamic structure of the model is carefully specified, consumption expenditure can be explained in terms of a limited number of variables (income and wealth). Some evidence is found, moreover, in favour of redefining income, while additional inflation effects appear to be not significant.

Date: 1982
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:17:y:1982:i:3:p:371-391

DOI: 10.1016/S0014-2921(82)80070-6

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