Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Economics

No 3-2019: Intratemporal Nonseparability Between Housing and Nondurable Consumption:Evidence from Reinvestment in Housing Stock

Natalia Khorunzhina ()
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Natalia Khorunzhina: Department of Economics, Copenhagen Business School, Postal: Copenhagen Business School, Department of Economics, Porcelaenshaven 16 A. 1. floor, DK-2000 Frederiksberg, Denmark

Abstract: Using the data on maintenance expenditures and self-assessed house value, I separate the measure of individual housing stock and house prices, and use these data for testing whether nondurable consumption and housing are characterized by intratemporal nonseparability in households’ preferences. I find evidence in favor of intratemporal dependence between total nondurable consumption and housing. I reach a similar conclusion for some separate consumption categories, such as food and utility services. My findings also indicate households are more willing to substitute housing and nondurable consumption within a period than to substitute composite consumption bundles over different time periods.

Keywords: Intratemporal Nonseparability; Housing; Nondurable Consumption

JEL-codes: C51; D12; D13; E21; R21

36 pages, May 14, 2019

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