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Title: |
Fluctuations in Consumer Durables Expenditure and Fixed Investment of
Korea |
| Author: |
Hong, Kiseok |
| Author
Affiliation: |
Korea
Development Institute |
| Source: |
International Economic Journal, Autumn 1999, v. 13, no. 3, pp. 59-65 |
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Publication Date: |
Autumn 1999 |
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Abstract: |
This paper examines time series
fluctuations of consumer durables expenditure and fixed investment.
Empirical studies in the past have typically found that fluctuations in
these expenditure series are inconsistent with the standard framework of
utility or profit maximization. As a result, the sources and patterns of
the volatility of the series have remained largely unexplained. This
paper attempts to provide an alternative description of the series, by
exploiting time series implications of the stock adjustment process. A
simple stock adjustment identity implies that purchases in durable goods
should exhibit strong reversion over time, and that the reversion is the
primary source of the volatility in durables expenditure series.
Empirical results of the paper support this hypothesis. |
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