EconPapers    
Economics at your fingertips  
 

Nominal Rigidities, Monetary Policy and Pigou Cycles

Stéphane Auray, Paul Gomme () and Shen Guo ()

No 12006, Working Papers from Concordia University, Department of Economics

Abstract: Capturing the boom phase of Pigou cycles and resolving the comovement problem requires positive sectoral comovement. This paper addresses these observations using a two sector New Keynesian model. Price rigidities dampen movements in the relative price of durables following a monetary policy shock. Durables and nondurables are estimated to be complements in utility, allowing for a resolution of the comovement problem for modest degrees of price rigidity. Nominal rigidities also make firms forward-looking in their pricing behaviour which leads to relative price dynamics that generate positive sectoral comovement in the boom phase of a Pigou cycle.

Keywords: Pigou cycles; comovement problem; monetary policy (search for similar items in EconPapers)
JEL-codes: E3 E5 E4 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac and nep-mon
Date: 2012-07
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://paulgomme.github.io/Pigou-paper.pdf (application/pdf)

Related works:
Journal Article: Nominal Rigidities, Monetary Policy and Pigou Cycles (2013) Downloads
Working Paper: Nominal Rigidities, Monetary Policy and Pigou Cycles (2011) Downloads
Working Paper: Nominal Rigidities, Monetary Policy and Pigou Cycles (2010) Downloads
Working Paper: Nominal Rigidities, Monetary Policy and Pigou Cycles (2009) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:crd:wpaper:12006

Access Statistics for this paper

More papers in Working Papers from Concordia University, Department of Economics Contact information at EDIRC.
Series data maintained by Economics Department ().

 
Page updated 2017-06-19
Handle: RePEc:crd:wpaper:12006