Uncertainty and the Timing of Automobile Purchases

Abstract

Earlier studies have shown that lumpy investment models well characterize individual expenditures on durables, in particular automobiles. In this class of models, a higher level of uncertainty generally implies that the household should tolerate a larger imbalance between the actual stock of the durable and the target stock before adjusting it by buying and/or selling. Then, if the level of uncertainty increases, aggregate expenditures would temporarily fall. This hypothesis is tested by estimating an aggregate lumpy investment model on automobile expenditure data, using stock market volatility to proxy uncertainty. The result is that expenditures fall significantly as stock market volatility increases.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 30 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.