Durable Consumption. In the two-period consumption-savings framework, the representative consumer's utility function is u(C, ,C2, CPUR , COUR) = In (c, ) + y . In(CPUR ) + B In(c2 ) + 4 . In(cour) ], in which the parameter S (the Greek lowercase letter "beta") is a fixed exogenous number between zero and one, w (the Greek lowercase letter "psi") is a fixed exogenous strictly positive number, c, is the period-1 flow of "nondurable" consumption, c2 is the period-2 flow of "nondurable" consumption, and cp and c2 DUR are "durable" goods in periods 1 and 2, respectively.' The relative prices of durable goods are p, DDUR and P2 DUR in periods 1 and 2, respectively. As can be seen in Figure 1, durable consumption goods are stock variables, not flow variables. Due to "wear and tear" of durable goods, an exogenous fraction & (the Greek lowercase letter "delta") of durable goods depreciates between periods. The depreciation parameter lies between zero and one (i.e., 0