On the Intertemporal Elasticity of Substitution under Nonhomothetic Utility

Masakatsu Okubo

Journal of Money, Credit and Banking, 2008, vol. 40, issue 5, 1065-1072

Abstract: In this note, we use a model with nonseparable and nonhomothetic preferences to estimate the intertemporal elasticity of substitution (IES). We show that, while the homothetic utility model may induce a bias that increases the elasticity of substitution between nondurables and durables, the estimated IES remains positive and significant. Copyright (c) 2008 The Ohio State University.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:40:y:2008:i:5:p:1065-1072

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