Consumer durables and monetary policy according to HANK

Emil Holst Partsch (), Ivan Petrella () and Emiliano Santoro ()
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Emil Holst Partsch: Danmarks Nationalbank, Copenhagen K, DK-2100 Denmark
Ivan Petrella: Department of Economics, Social Studies, Applied Mathematics and Statistics, and Collegio Carlo Alberto, University of Turin, Torino, Italy; CEPR
Emiliano Santoro: Department of Economics and Finance, Catholic University of Milan

No 102, Working papers from Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino

Abstract: Durables' interest-rate sensitivity and their persistent comovement with nondurable spending are hallmarks of monetary policy transmission. We develop a two-sector HANK model that replicates this pattern-both across spending categories and among households sorted by liquid asset holdings, consistent with empirical evidence. Direct effects of real interest rate changes are quantitatively important in reproducing sectoral expenditure comovement, while infrequent information updating is crucial to match the hump-shaped dynamics of sectoral and aggregate expenditures. Income effects are essential to preventing counterfactual declines in nondurable spending resulting from fiscal interventions specifically aimed at stimulating durable purchases.

Keywords: Durable goods; Sectoral Comovement; Monetary Policy; HANK (search for similar items in EconPapers)
JEL-codes: E21 E31 E40 E44 E52 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2025-12
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