Non-durable Consumer Goods Research Articles

Estimating Models with Intertemporal Substitution Using Aggregate Time Series Data

In conducting empirical investigations of the permanent income model of consumption and the consumption-based intertemporal asset pricing model, various authors have imposed restrictions on the nature of the substitutability of consumption across goods and over time. In this paper we suggest a method for testing some of these restrictions and present empirical results using this approach. Our empirical analyses focuses on three questions: (i) Can the services from durable and nondurable goods be treated as perfect substitutes? (ii) Are preferences completely separable between durable and nondurable goods? (iii) What is the nature of intertemporal substitutability of nondurable consumption? When consumers' preferences are assumed to be quadratic, there is very little evidence against the hypothesis that the services from durable goods and nondurable goods are perfect substitutes. These results call into question the practice of testing quadratic models of aggregate consumption using data on nondurables and services only. When we consider S branch specifications, we find more evidence against perfect substitutability between service flows, but less evidence against strict separability across durable and nondurable consumption goods. Among other things, these findings suggest that the empirical shortcomings of the intertemporal asset pricing model cannot be attributed to the neglect of durable goods.

Do Concentrated Markets Spend More on Advertising? Evidence on Nondurable Consumer Goods Industries

This study explores the relationship between market concentration and the level, intensity and distribution of industry advertising. Industry and top four firm annual advertising expenditures in 12 established consumer nondurable product groups are positively and significantly related to market concentration. These results hold for a relatively homogeneous subset of product categories, for alternative functional forms, and for alternative measures of advertising.

Modelling multibrand consumption

In this article a model for the multibrand consumption of fast moving non-durable consumer goods is presented. The model is derived by the mixing of a multinomial distribution (representing the brand consumption probabilities of an individual household) with the continuous multivariate Beta (Dirichlet) distribution (which allows for differences between households). The core of the analysis involves the use of complete bivariate tables. The model is shown to provide an adequate representation of a set of consumption data and to satisfactorily estimate the various brand market shares.

Characteristics of mexican economic growth: Empirical testing of some latin american structuralist hypotheses

This article examines a series of hypotheses about the Latin American industrialization process put forward by the structuralist school of thought, using Mexico as a test case. In particular it examines the relationship between the distribution of income and associated patterns of consumption and industrial structure and its implications on demand-constraints, growth- constraints, employment constraint and multinational control. The results indicate that the modern-traditional dichotomy based on durable versus non-durable consumer goods is not the best way to examine this relationship since the consumption patterns for durable goods do not show a homogeneous behavior when distribution changes. Overall, it was found that growth and employment constraints and multinational control seem to get more exacerbated under greater inequality. With respect to the demand-constraints no definite conclusion can be made because of the mentioned heterogeneity in the response of durable goods to changes in distribution and the lack of information on relative excess capacity and/or dynamic linkages of the different sectors.

Product life cycle research: A literature review

The purposes of this paper are threefold: to review the scope of product life cycle (PLC) research; to pinpoint areas requiring further investigation; and to provide guidelines for future researchers. Because of the paucity of empirical evidence, only tentative conclusions are advanced. For example, the most common PLC pattern is the classical, bell-shaped curve, but it is not the sole shape. The application of various forecasting techniques across the PLC have met with merely moderate success. Very little research has been conducted either on how different characteristics of the firm influence the PLC or on the actual use of various PLC-strategy theories by business planners. Finally, investigators have focused almost exclusively on validating the existence of the PLC concept among nondurable consumer goods. Industrial items, as well as major product changes, have been nearly ignored. The main conclusion is that additional research-more diversified and extensive in nature-is needed on many PLC topics.

Results concerning Brand Choice

This article is concerned with stochastic models of consumer purchasing behavior for household purchases of frequently bought nondurable consumer goods, such as foods and toiletries. A model of multibrand purchasing behavior is developed for the independent case and the results help to justify some assumptions which have been made by various authors in the construction of models of buyer behavior. The implications for a general model of multibrand buying behavior are then considered.

Ein dynamisches Modell der Nachfrage nach Geld und dauerhaften Konsumg�tern

This paper attempts to construct and estimate a model of consumer demand for assets that explicitly takes into account the existence of the budget constraint for the consumer sector. The analysis concerns itself explicitely with two assets, money and consumer durables. In selecting these two assets for a more detailed analysis we follow the example ofChow. Models similar to the one presented have been derived by other authors, in particularChow andDarby, following the tradition of the Chicago School; but there are differences in the rational for including both permanent income and current income as arguments in the demand for many function. WhileChow andDarby in their analysis essentially adopt as a basic assumptionFriedman's hypothesis that consumption (of nondurable consumer goods) is proportional to permanent income, the current income term in this paper is justified directly through the aggregate budget constraint. The empirical results for the Austrian economy assert that a part of transitory income is invested in consumer durables. This finding may be interpreted to indicate that the inventory role which is commonly ascribed to money holdings is also important for consumer durables. The results obtained from the demand for money function show that the distinction between short-term and long-term accruals and disbursals of money is an important one. The proportion of (positive) transitory income retained as money is about one forth to one half (depending on whether lagged transitory income is also considered or not). Excessive balances are drawn down at the rate of over and half each quarter.

The Role of Interest Rates and Inflation in the Consumption Function

MOST OF THE ANALYSIS of the effects of interest rate changes on consumption has been concerned with (1) the relative importance of income and substitution effects in determining how households will allocate their resources over time, and (2) the substitution effect at a moment of time determining the demands for durable versus nondurable consumption goods. But two other types of interest rate effects on consumption-effects that have received little attention in the literature-may be of some importance and are the subject of this report. The rate of inflation enters the analysis because of the wedge it drives between the nominal and real rates of interest. One of the effects to be considered is a consequence of the fact that the real rate of interest helps determine the services yielded by the stock of consumer durables. Following a common practice in econometric work on consumption, the services of durables are included in consumption and purchases of consumer durables are excluded. Services of durables must also be added to disposable income. Since the value of such services cannot be ascertained from market transactions, it must be imputed. The stock of consumer durables is first estimated, and then multiplied by a depreciation rate and a net rate of return to obtain the gross yield on the stock. Since

Consumption of Nondurable Goods and Contractual Commitment of Disposable Income

Tp wo forces, relatively unimportant several decades ago, have influenced the destiny of the consumer dollar in the years following the Second World War. The first of those forces is the growth of installment and mortgage credit relative to disposable income, and the second is the growth of contractual savings relative to the total amount of personal saving. It is argued in this paper that these two forces, even though stabilizing contractual savings and payments, have altered the pattern of nondurable goods consumption in certain undesirable ways. Since the end of World War II, the phenomenal rise in installment and mortgage credit and its possible de-stabilizing effect on the economy has been a subject of much discussion among economists. But in this paper, our attention is mainly directed to the neglected aspect of how durable goods financing has affected, surreptitiously, the consumption expenditures for nondurable goods and services and how the change may adversely affect the stability of the economy. The change is measured in this paper by comparing two periods the most recent decade, that is, the fifties, and the twenties, a decade selected for statistical convenience as well as for cyclical comparability. The relative importance of these two forces in the two periods and appropriate analytical framework are presented in Section I; the results of empirical investigations and tests are summarized in Section II; and policy implications are examined in Section III.

The Pattern of Consumer Purchases

We are concerned here with the ordinary private consumer's purchases of non-durable consumer goods. These goods are usually characterised by being marketed in pre-packed and branded form. Data about such purchases are obtained by market research techniques such as, in the case of Attwood's, the continuous consumer panels (see reference 1) based on random samples of either households or individuals and operated in various European countries including Great Britain. (The samples used in market research are almost always large in the statistical sense, so that no small-sample theory is required.) The basic unit of time for measuring consumer purchases is usually a week, one week being generally like another. Most analyses are, however, made over periods of 4 or 13 weeks. For any such period of time, we therefore know how many consumers in the sample bought 0, 1, 2, 3, 4, or, in general, r, units of the given product, i.e. we know the frequency distribution of purchases. We generally also know what each of the consumers bought in preceding periods and can continue to watch his subsequent purchases. The problem considered in this paper is the fit of the negative binomial distribution to such data. Product-fields analysed include the following: Bread, Breakfast Cereals, Canned Vegetables, Cat and Dog Foods, Cocoa, Coffee, Confectionery, Detergents, Disinfectants, Edible Fats, Food Drinks, Household and Toilet Soaps, Jams and Marmalade, Polishes, Processed Cheese, Sausages, Shampoos, Soft Drinks, and Soups.