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- Title
On the Intertemporal Elasticity of Substitution under Nonhomothetic Utility.
- Authors
Okubo, Masakatsu
- Abstract
In this note, we use a model with nonseparable and nonhomothetic preferences to estimate the intertemporal elasticity of substitution (IES). We show that, while the homothetic utility model may induce a bias that increases the elasticity of substitution between nondurables and durables, the estimated IES remains positive and significant.
- Subjects
ELASTICITY (Economics); UTILITY theory; CONSUMPTION (Economics); SUBSTITUTION (Economics); DURABLE consumer goods; NONDURABLE goods
- Publication
Journal of Money, Credit & Banking (Wiley-Blackwell), 2008, Vol 40, Issue 5, p1065
- ISSN
0022-2879
- Publication type
Article
- DOI
10.1111/j.1538-4616.2008.00146.x