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Excess Smoothness and Durable Goods: Evidence from Subjective Expectations Data

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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.

Suggested Citation

  • Mario Padula, 2000. "Excess Smoothness and Durable Goods: Evidence from Subjective Expectations Data," CSEF Working Papers 38, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:38
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    More about this item

    Keywords

    Durable Goods; Intertemporal Substitution; Excess Smoothness; Subjective Expectations;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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