A surge in expenditure after payday could also reflect stockpiling of durable goods. Households might try to minimize transaction costs of shopping by buying all of their durable goods in one large shopping trip. Given the presence of binding credit constraints, and even a slight degree of impatience, households could choose to time this large shopping trip at the beginning of each pay period. In this case the decline we observe in expenditure need not indicate a decline in consumption, because households could choose smooth consumption of durable goods over the pay period after stockpiling at the beginning. Column (4) shows that stockpiling is not an adequate.
