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- Title
Substitution Elasticities Between Durable and Nondurable Goods in the United States: New Evidence from the Dynamic Laurent System.
- Authors
Fleissig, Adrian R.
- Abstract
This paper uses the dynamic Laurent demand system to jointly estimate the service flows from durable and nondurable goods. The parameter estimates are used to obtain the Morishima elasticity of substitution between goods for the United States from 1960:1 to 1991:4. One of the significant results of this study is that the Morishima elasticities of substitution vary over time instead of being constant. This result implies that the use of the CES functional form gives a poor approximation of the demand system for the data used in this paper. Another important result is that consumers adjust to their long-run equilibrium holding of consumption goods slowly rather than quickly.
- Subjects
UNITED States; ELASTICITY (Economics); ECONOMIC demand; DURABLE consumer goods; NONDURABLE goods
- Publication
Empirical Economics, 1997, Vol 22, Issue 1, p1
- ISSN
0377-7332
- Publication type
Article
- DOI
10.1007/BF01188167