Fickle Consumers, Durable Goods, and Business Cycles

This paper develops a three sector dynamic general equilibrium model with the specific aim of evaluating the role of consumer durables in the generation and propagation of business cycles. The model displays indeterminacy at commonly considered realistic parameter restrictions and basically constant...

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Bibliographic Details
Published in:Journal of economic theory 1998-07, Vol.81 (1), p.37-57
Main Author: Weder, Mark
Format: Article
Language:English
Subjects:
Business cycles
Consumer goods
Consumers
Durable goods
Economic fluctuations
Economic growth
Economic models
Economic theory
Economies of scale
Equilibrium
Studies
U.S.A
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Summary:This paper develops a three sector dynamic general equilibrium model with the specific aim of evaluating the role of consumer durables in the generation and propagation of business cycles. The model displays indeterminacy at commonly considered realistic parameter restrictions and basically constant returns to scale. If calibrated at modest increasing returns to scale, the sunspots driven model version produces a close match to moments of aggregate U.S. data.Journal of Economic LiteratureClassification Numbers: E00, E32.
ISSN:0022-0531
1095-7235
DOI:10.1006/jeth.1998.2413