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http://hdl.handle.net/10016/2797
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| we9113.pdf | -- 2008-08-14 -- Available on Internet -- preprint | 611,45 kB | Adobe PDF | |  |
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| Title: | The dynamics of durable goods markets: rational expectations and sticky prices |
| Author(s): | Ocaña Pérez de Tudela, Carlos |
| Publisher: | Universidad Carlos III de Madrid. Departamento de Economía |
| Issued date: | Mar-1991 |
| URI: | http://hdl.handle.net/10016/2797 |
| Abstract: | This paper studies price dynamics in a durable good market under the assumption that consumers have rational expectations on future prices. For a wide variety of expectations, optimal consumption plans result in sticky-price demand functions. Market dynamics are characterized by intertemporal price discrimination which provides a possible explanation for the declining path of price observed in many "young" industries. Unexpected shocks on demand result in price overshooting, while unexpected supplyshocks have the opposite effect on price. |
| Serie / Nº.: | Working Papers
1991-13 |
| Keywords: | Durable Goods
Rational Expectations
Sticky Prices
Interıtemporal
Overshooting |
| Appears in Collections: | Economists Online
DE - Working Papers. Economics. WE
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