MODELING THE DEMAND FOR CONSUMPTION GOODS AND LIQUID ASSETS

This paper examines consumer expenditure decisions in a dynamic utility maximizing framework addressing the interdependence between the demand for liquid assets and consumption goods. The approach explicitly develops microtheoretic dynamic generalizations of the traditional static translog models, and it is shown that a version of the generalized dynamic translog fits the data best and that weak separability of liquid assets from consumption goods is supported by the data. © 1991.