Durable Goods, Inter-Sectoral Linkages and Monetary Policy

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

Cahiers de recherche from Universite de Montreal, Departement de sciences economiques

Abstract: Barsky, House and Kimball (2007) show that introducing durable goods into a sticky-price model leads to negative sectoral comovement of production following a monetary policy shock and, under certain conditions, to aggregate neutrality. These results appear to undermine sticky-price models. In this paper, we show that these results are not robust to two prominent and realistic features of the data, namely input-output interactions and limited mobility of productive inputs. When extended to allow for both features, the sticky-price model with durable goods delivers implications in line with VAR evidence on the effects of monetary policy shocks.

Keywords: Durability; Input-Output Interactions; Roundabout Production; Sectoral Comovement; Monetary Policy (search for similar items in EconPapers)
JEL-codes: E21 E23 E31 E52 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2008
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Durable goods, inter-sectoral linkages and monetary policy (2011)
Working Paper: Durable Goods, Inter-Sectoral Linkages and Monetary Policy (2008)
Working Paper: Durable Goods, Inter-Sectoral Linkages and Monetary Policy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:mtl:montde:2008-10

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