Dynamics of expenditures on durable goods: the role of new-product quality
Bertolotti, F., Gavazza, A.
& Lanteri, A.
(2023).
Dynamics of expenditures on durable goods: the role of new-product quality.
Economic Journal,
133(652), 1641 - 1656.
https://doi.org/10.1093/ej/uead006
& Lanteri, A.
(2023).
Dynamics of expenditures on durable goods: the role of new-product quality.
Economic Journal,
133(652), 1641 - 1656.
https://doi.org/10.1093/ej/uead006
We study the role of new-product quality for the dynamics of durable-good expenditures around the Great Recession. We assemble a rich dataset on US new-car markets during 2004–12, combining data on transaction prices with detailed information about vehicles’ technical characteristics. During the recession, a reallocation of expenditures away from high-quality new models accounts for a significant decline in the dispersion of expenditures. In turn, car manufacturers introduced new models of lower quality. The drop in new-model quality persistently depressed the technology embodied in vehicles, and likely contributed to the slow recovery of expenditures.
Explore Further
- E21 - Macroeconomics: Consumption; Saving; Aggregate Physical and Financial Consumer Wealth
- E23 - Production
- E32 - Business Fluctuations; Cycles
-
Gavazza, A., Bertolotti, F. & Lanteri, A.
(2022).
Replication package for: "Dynamics of Expenditures on Durable Goods: the Role of New-Product Quality".
[Dataset]. Zenodo.
https://doi.org/10.5281/zenodo.7492190
