EconPapers    
Economics at your fingertips  
 

Credit frictions and the comovement between durable and non-durable consumption

Vincent Sterk

Journal of Monetary Economics, 2010, vol. 57, issue 2, 217-225

Abstract: Frictions in lending between households have been proposed as a solution to the difficulties new-Keynesian models have in predicting a decline in both durable and non-durable consumption following a monetary tightening. By revisiting a standard new-Keynesian framework with collateral constraints, it is shown that the presence of such credit frictions in fact makes it more difficult to generate the joint decline. The intuitive reasons behind this result are provided, which should be helpful in developing models that are more successful in generating a positive comovement between durables and non-durables.

Keywords: New-Keynesian; models; Financial; frictions; General; equilibrium (search for similar items in EconPapers)
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28) Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304-3932(09)00187-1
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Credit Frictions and the Comovement between Durable and Non-durable Consumption (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: https://EconPapers.repec.org/RePEc:eee:moneco:v:57:y:2010:i:2:p:217-225

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2021-08-26
Handle: RePEc:eee:moneco:v:57:y:2010:i:2:p:217-225