TY  - JOUR
AU  - Clarida,Richard H.
TI  - Permanent Income, Import Prices, and the Demand for Imported Consumer Durbales: A Structural Econometric Investigation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4437
PY  - 1993
Y2  - August 1993
UR  - http://www.nber.org/papers/w4437
L1  - http://www.nber.org/papers/w4437.pdf
N1  - Author contact info:
Richard H. Clarida
Columbia University
420 West 118th Street
Room 1111, IAB
New York, NY  10027
Tel: 212/854-3676
Fax: 212/854-8059
E-Mail: rhc2@columbia.edu
AB  - This paper derives a rational expectations, permanent income model of the demand for imported consumer durable goods. Assuming that the preferences of the representative household are addilog, our model implies that the log of the exact but unobservable utility index of permanent income must in equilibrium be cointegrated with log consumption of nondurables. Using nondurables consumption as our noisy proxy for permanent income, we estimate that log nondurables consumption, the log relative price of durables imports, and log spending on durables imports are cointegrated, and that this cointegrating vector exactly identifies the model's structural parameters. We are unable to reject the essential empirical implications of the model, and obtain sensible estimates of the price and income elasticities of the demand for imported consumer durables. In particular, we find that consumer durables imports are quite price elastic in the long run, and that the permanent income elasticity of imported durable goods demand averages 2.3.
ER  -