Are there asymmetries in UK consumption? A closer look

Abstract

This letter reappraises some recently reported tests for asymmetries in UK consumers’ expenditure relative to trend. In particular, we consider the disaggregation of consumers’ expenditure into broad categories of durable and non-durable goods and services, and according to 13 specific consumption categories. We also consider the sensitivity of test results to alternative detrending methods; namely Hodrick–Prescott filtering and structural time series modelling. We find that previous consideration of total consumers expenditure alone masks an important difference in the properties of expenditure across the durable/non-durable distinction, durables exhibiting significant asymmetric ‘steepness’ which is robust to the method of detrending, while non-durables exhibit significant ‘deepness’ under Hodrick–Prescott detrending but not structural time series trend modelling.