Monetary Policy and the Relative Price of Durable Goods

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 5328

Classification and Topics

• Classification: Wirtschaft ; Monetary Policy ; Business Fluctuations; Cycles
• Subject: monetary policy ; durables ; nondurables ; comovement ; relative price ; DSGE ; Bayesian estimation ; SVAR ; sign restrictions ; narrative approach

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Cantelmo, Alessandro ; Melina, Giovanni
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/110829
• Last update: 10.03.2025, 11:42 AM CET