ABSTRACT
Our estimation results show that household income in the US and Japan are also normally distributed. Based on the principle that the sum of independent normal distributions is also normally distributed, we can infer that the global household income is also normally distributed. Therefore, the global demand for durables is subject to cyclical fluctuations due to the interactions between production cycles and normally distributed household income. The demand for non-durables is subject to a half-cycle for the same reason. After taking into consideration replacement demand and the demand for new products, global demand for durables or non-durables is in a state of continuous cyclical fluctuation. Due to international spillovers, domestic demand for consumer goods in each country is also subject to cyclical fluctuation. But the integration of international markets can raise the mean and variance of the demand for durables, resulting in rightward shifts and flattening of the demand density function for durables and thus reduction of the magnitude of fluctuation. For the same reason as durables, when export is taken into consideration, the demand curve for non-durables is still S-shaped, and the growth rate of demand still exhibits the features of a half-cycle, but they are all flatter than the domestic demand curve.
