Demand For Durable Goods, Nondurable Goods And Services

Separate macroeconomic consumption demand functions are developed and tested for (1) durable goods, (2) nondurable goods and (3) services. These are compared for consistency with econometric studies of total consumer demand. Key factors determining demand for these goods are tested using U.S. 1960 - 2000 data. The econometric method used was 2SLS with heteroskedasticity controls. Data in first differences are used to reduce multicollinearity, non stationarity and autocorrelation. The models explain 94% of the variance in demand for consumer durables, 86% of demand for nondurable consumer goods and 81% of services demand. Demand for durables like autos and appliances, was found to be driven by the disposable income, wealth, the exchange rate, availability of consumer credit, interest rates on consumer credit, demand for new housing, which affects appliance demand, and population growth. Demand for nondurable goods, such as groceries and clothes, was driven by the same factors, except for new housing demand and the exchange rate. Demand for consumer services such as laundry, restaurant, and entertainment services was found to be related to disposable income, wealth, and population growth, but not related to consumer credit availability, or consumer credit interest rates. However, mortgage interest rates paid by households did seem to affect the demand for services.

Kinetic models for goods exchange in a multi-agent market

We introduce a system of kinetic equations describing an exchange market consisting of two populations of agents (dealers and speculators) expressing the same preferences for two goods, but applying different strategies in their exchanges. We describe the trading of the goods by means of some fundamental rules in price theory, in particular by using Cobb-Douglas utility functions for the exchange. The strategy of the speculators is to recover maximal utility from the trade by suitably acting on the percentage of goods which are exchanged. This microscopic description leads to a system of linear Boltzmann-type equations for the probability distributions of the goods on the two populations, in which the post-interaction variables depend from the pre-interaction ones in terms of the mean quantities of the goods present in the market. In this case, it is shown analytically that the strategy of the speculators can drive the price of the two goods towards a zone in which there is a marked utility for their group. Also, the general system of nonlinear kinetic equations of Boltzmann type for the probability distributions of the goods on the two populations is described in details. Numerical experiments then show how the policy of speculators can modify the final price of goods in this nonlinear setting

ADVERTISING TRADED GOODS

Nerlove and Waugh's theory of cooperative (generic) advertising is extended to include tax shifting, cost sharing, and trade. Comparative-static analysis indicates that trade reduces the incentive to promote in the domestic market, and this is true whether the industry inquestion is a net exporter or a net importer. The theory is applied to California egg advertising to demonstrate utility and to highlight the importance of including trade relationships in advertising benefit-cost studies.International Relations/Trade, Marketing,

A note on Ramsey and Corlett-Hague rules

Ramsey-type results dictate that an optimal pattern of taxes must tax more heavily those goods which have a more inelastic(compensated)demand. Corlett and Hague (1953) investigated the optimal revenue-neutral movements from an initial uniform tax. They obtained that the goods (relatively) more complementary to the untaxed good (leisure)should see their taxes increased-which in a revenue-neutral seeting implies that the other goods see their taxes disminished. In a three-good economy (with only two goods being subject to taxation) the Ramsey-type rule and the Corlett-Hague result can be easily related