Inflation Stabilisation And The Consumption Of Durable Goods  

Oleh:

de Gregorio, Jose ; Guidotti, Pablo E. ; Vegh, Carlos A.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 108 no. 446 (Jan. 1998), page 105-131.
Fulltext: 105.pdf (426.37KB)

Isi artikel

Exchange rate-based stabilisations in chronic-inflation countries have often been characterised by an initial consumption boom (which is most evident in the behaviour of durable goods) followed by a later contraction. This paper provides an explanation for such a boom-recession cycle based on the timing of purchases of durable goods. The initial fall in inflation results in a wealth effect which induces many consumers to bring forward their purchases of durable goods, thus generating an aggregate consumption boom. Since most consumers replenish their stock of durable goods at the beginning of the programme, a later slowdown follows.

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