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Monetary Policy and the Relative Price of Durable Goods

Alessandro Cantelmo () and Giovanni Melina ()

No 5328, CESifo Working Paper Series from CESifo

Abstract: In a VAR model of the US, the response of the relative price of durables to a monetary contraction is either flat or mildly positive. It significantly falls only if narrowly defined as the ratio between new house and nondurables prices. These findings survive three identification strategies and across subsamples. Then, they are rationalized via the estimation of a two-sector New-Keynesian model. Here, the degree of overall durables price stickiness is not dramatically lower than that of nondurables. Such macroeconometric results are close to recent microeconometric evidence. Moreover, they suggest that monetary policy is not very distortive of sectoral allocations.

Keywords: monetary policy; durables; nondurables; comovement; relative price; DSGE; Bayesian estimation; SVAR; sign restrictions; narrative approach (search for similar items in EconPapers)
JEL-codes: E32 E52 (search for similar items in EconPapers)
Date: 2015
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Related works:
Journal Article: Monetary policy and the relative price of durable goods (2018) Downloads
Working Paper: Monetary Policy and the Relative Price of Durable Goods (2017) Downloads
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