Nominal Rigidities in Debt and Product Markets

Carlos Garriga (), Finn Kydland and Roman Šustek

No 22613, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Standard models used for monetary policy analysis rely on sticky prices. Recently, the literature started to explore also nominal debt contracts. Focusing on mortgages, this paper compares the two channels of transmission within a common framework. The sticky price channel is dominant when shocks to the policy interest rate are temporary, the mortgage channel is important when the shocks are persistent. The first channel has significant aggregate effects but small redistributive effects. The opposite holds for the second channel. Using yield curve data decomposed into temporary and persistent components, the redistributive and aggregate consequences are found to be quantitatively comparable.

JEL-codes: E32 E52 G21 R21 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-ban, nep-dge, nep-mac and nep-sog
Note: ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Published as Carlos Garriga & Finn E. Kydland & Roman Sustek, 2016. "Nominal rigidities in debt and product markets," Federal Reserve Bank of St. Louis, Working Papers, vol 2016(17).

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Related works:
Working Paper: Nominal rigidities in debt and product markets (2016)
Working Paper: Nominal rigidities in debt and product markets (2016)
Working Paper: Nominal rigidities in debt and product markets (2016)
Working Paper: Nominal Rigidities in Debt and Product Markets (2016)
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