CYCLICAL BEHAVIOUR OF CONSUMPTION OF NON-DURABLE GOODS: SPAIN VERSUS U.S.A.

This paper studies the excessive volatility of Spanish aggregate non-durables consumption with relation to aggregate income. In this paper we stress the importance of non-durables imports over the variability of total non-durables consumption and we propose a theoretical model that formalizes the relation between domestic and imported consumption. The main finding of the paper is that a model of intertemporal optimization where there is no credit constrain or government can produce so high volatilities of consumption as the ones observed.