THE TRANSMISSION OF MONETARY POLICY IN A MULTISECTOR ECONOMY

Hafedh Bouakez, Emanuela Cardia () and Francisco Ruge-Murcia

International Economic Review, 2009, vol. 50, issue 4, 1243-1266

Abstract: This article constructs and estimates a sticky-price, Dynamic Stochastic General Equilibrium model with heterogeneous production sectors. Firms in different sectors vary in their price rigidity, production technology, and the combination of material and investment inputs. In particular, firms buy inputs from all sectors using the actual Input-Output Matrix and Capital Flow Table of the U.S. economy. By relaxing the standard assumption of symmetry, this model allows idiosyncratic sectoral dynamics in response to monetary policy shocks. The model is estimated by the Generalized Method of Moments using sectoral and aggregate U.S. time series. Copyright © (2009) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 2009
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Related works:
Working Paper: The Transmission of Monetary Policy in a Multi-Sector Economy (2005)
Working Paper: The Transmission of Monetary Policy in a Multi-Sector Economy (2005)
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