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Cyclicality and Durability: Evidence from U.S. Consumers' Expediture

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  • Steven Cook

    (Coventry Business School)

Abstract

In this paper three hypotheses concerning the cyclicality of U.S. consumers' expenditure are proposed. These hypotheses are based upon the distinction between expenditure on durable and non-durable goods. It is argued that durability will lead to increased cyclical sensitivity and that this increased cyclicality will be of an asymmetric nature. The asymmetric adjustment will be of the form of decreases in expenditure on durable goods being more extensive and more rapid during recessionary phases of the business cycle than corresponding increases during expansionary periods. These hypotheses are evaluated using U.S. data on consumer durables and non-durables over the period 1959-1998. Via the use of the Hodrick-Prescott (1997) filter the cyclical elements of these series are derived and subjected to Sichel's (1993) univariate tests of business cycle asymmetry. Overwhelming support is found for all of the hypotheses proposed.

Suggested Citation

  • Steven Cook, 1999. "Cyclicality and Durability: Evidence from U.S. Consumers' Expediture," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 299-310, November.
    • Handle: RePEc:cem:jaecon:v:2:y:1999:n:2:p:299-310
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    References listed on IDEAS

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    Cited by:

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    2. Tanya Mark & Colette Southam & Jan Bulla & Sergio Meza, 2016. "Cross-category indulgence: Why do some premium brands grow during recession?," Journal of Brand Management, Palgrave Macmillan, vol. 23(5), pages 114-129, September.
    3. Marnik G. Dekimpe & Barbara Deleersnyder, 2018. "Business cycle research in marketing: a review and research agenda," Journal of the Academy of Marketing Science, Springer, vol. 46(1), pages 31-58, January.
    4. Egon Smeral, 2019. "Seasonal forecasting performance considering varying income elasticities in tourism demand," Tourism Economics, , vol. 25(3), pages 355-374, May.
    5. Cook, Steven, 2003. "A Note on Business Cycle Non-Linearity in U. S. Consumption," Journal of Applied Economics, Universidad del CEMA, vol. 6(2), pages 1-7, November.

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    More about this item

    Keywords

    Asymmetry; Consumers´ Expenditure;

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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