EXPENDITURE ALLOCATION ACROSS NONDURABLES, SERVICES, DURABLES AND SAVINGS - AN EMPIRICAL-STUDY OF SEPARABILITY IN THE LONG-RUN

The separability of categories of consumption expenditures and savings are empirically examined in the context of an error‐correction model of aggregate quarterly expenditure allocations in Canada. Some evidence is found for separability of consumption allocations from savings in both the long run structure and short run dynamics of the model lending some support to the use of the assumption in modelling consumption behaviour. Copyright © 1991 John Wiley & Sons, Ltd.