New Keynesian models, durable goods, and collateral constraints

Econometric evidence suggests that, in response to monetary policy shocks, durable and non-durable spending co-move positively, and durable spending exhibits a much larger sensitivity to the shocks. A standard two-sector New Keynesian model with perfect financial markets is at odds with these facts. The introduction of a borrowing constraint, where durables play the role of collateral assets, helps in reconciling the model with the empirical evidence.

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Year of publication:	2009
Authors:	Monacelli, Tommaso
Published in:	Journal of Monetary Economics. - Elsevier, ISSN 0304-3932. - Vol. 56.2009, 2, p. 242-254
Publisher:	Elsevier
Keywords:	Durable goods Sticky prices Collateral constraint

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Type of publication:	Article
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005131662