Durable Goods, Inter-Sectoral Linkages and Monetary Policy

  title={Durable Goods, Inter-Sectoral Linkages and Monetary Policy},
  author={Hafedh Bouakez and Emanuela Cardia and Francisco J. Ruge-Murcia},
  • Hafedh Bouakez, Emanuela Cardia, Francisco J. Ruge-Murcia
  • Published 2008
Barsky, House and Kimball (2007) show that introducing durable goods into a stickyprice 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… CONTINUE READING