Consumption is the principal feature of Iran’s Gross National Production. Therefore, recognizing of factors that influence it is quite crucial. This article, investigates habit formation, durability, relative risk aversion and intertemporal substitution in consumption expenditures of Iranian households. For empirical study, at first, we constructed two weighted portfolio of the main assets re...

Real annual consumption growth has averaged about 3.7% between 1998 Q1 and 2003 Q3—well above real average annual GDP growth of about 2.6% during that period. (2) Chart 1 shows that the buoyancy of consumer spending can be entirely accounted for by strong growth in durable and semi-durable goods expenditure (henceforth referred to as 'durable spending' unless otherwise specified). Since 1998 Q1...

In this paper, we develop a two-sector DSGE model with infrequent purchases of durable goods and use it to address the following three issues. Does this model help explain the recent weak recovery? Can this model help resolve the absence of co-movement between durable and non-durable consumption? Is the dynamic behavior of this model similar with that of the (durable goods) stock adjustment-cos...

In this paper, we analyze the effects of money on the market for durable goods both empirically and theoretically. Using monthly US data on personal expenditures on durable goods and the housing market, we estimate from a VAR the dynamic responses of the price and quantity of durable goods and housing to money supply shocks, assuming only that money is neutral in the long-run. We then estimate ...

The purpose of this paper is to study whether trade frictions in durable goods markets help account for the patterns of household consumption expenditures observed in the Consumer Expenditure Survey (CEX), namely that the response of durable goods expenditures to income shocks is 78 percent larger than that of nondurable goods and the variance of the idiosyncratic part of log durable goods expe...

Is the variety of products supplied in markets a reflection of the diversity of consumers’ preferences? In this paper, we argue that the distribution of durable goods offered in markets tends to be compressed relative to the distribution of consumers’ underlying preferences. In particular, there are strong incentives for conformity in markets for durable goods. The reason for conformity is natu...

We examine whether the Coase conjecture [7, 14, 4, 10] is robust against slight ability of commitment of the monopolist not to sell the durable goods to consumers. We quantify the commitment ability in terms of the speed that the durable goods perish, while keeping the time between the o ers small. We demonstrate that the slight commitment capability makes a substantial di erence by constructin...

A durable-goods monopolist may use quality degradation as a commitment not to lower price in the future. The introduction of damaged goods expedites lowvaluation consumers’ future demands, and helps the firm to mitigate the Coasian time-consistency problem. In such a case, damaged goods are more likely to be observed relative to the static setting where only the price-discrimination aspect of q...

We study the cyclical effects of the timing of durable goods purchases in a general equilibrium model in which both durable and non-durable goods are consumed and the durable good is lumpy. At the microeconomic level, the timing of durable goods purchases supplies some insulation for nondurable consumption over the cycle. At the macroeconomic level, the timing decisions tend to amplify and prop...