Aggregate Shocks, Idiosyncratic Risk, and Durable Goods Purchases: Evidence from Turkey's 1994 Financial Crisis

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 14.12.2004, 12:00 - 13:30

   

Presentation by 

Burcu Duygan (European University Institute)
   

Abstract:

Durable goods spending is the most cyclically volatile component of household consumption, yet the
micro-level dynamics of this variable remain largely unknown. This paper investigates the relationship
between durables purchases and employment uncertainty using a unique household data set collected
throughout Turkey's 1994 financial crisis. Results show that higher unemployment risk households are
less likely to buy durables, even after controlling for differences in income and tastes. For households
that do buy, the paper also analyzes risk versus purchase magnitude. The amount is positively correlated
with uncertainty only for small durables and is otherwise statistically insignificant.

   
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