New Keynesian models, durable goods, and collateral constraints

Tommaso Monacelli

Journal of Monetary Economics, 2009, vol. 56, issue 2, 242-254

Abstract: Econometric evidence suggests that, in response to monetary policy shocks, durable and non-durable spending co-move positively, and durable spending exhibits a much larger sensitivity to the shocks. A standard two-sector New Keynesian model with perfect financial markets is at odds with these facts. The introduction of a borrowing constraint, where durables play the role of collateral assets, helps in reconciling the model with the empirical evidence.

Keywords: Durable; goods; Sticky; prices; Collateral; constraint (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (222)

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Working Paper: New Keynesian Models, Durable Goods and Collateral Constraints (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:56:y:2009:i:2:p:242-254

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