Durable Goods Cycles

28 Pages Posted: 29 Jun 1999 Last revised: 4 Feb 2021

See all articles by Andrew Caplin

Andrew Caplin

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

John V. Leahy

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: February 1999

Abstract

We show that a straight forward approximation of the distribution of durable goods holdings gives rise to a tractable equilibrium (S,s) model of durable demand. We analyze both competitive and monopoly supply. We show that equilibrium interactions lead to elongated impulse responses in demand, to procyclical markups in response to demand shocks, and to countercyclical markups in response to cost shocks.

Suggested Citation

Caplin, Andrew and Leahy, John V., Durable Goods Cycles (February 1999). NBER Working Paper No. w6987, Available at SSRN: https://ssrn.com/abstract=151991

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John V. Leahy

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