Sticky-Price Models and Durable Goods Journal Article uri icon

Overview

abstract

  • The inclusion of a durable goods sector in sticky-price models has strong and unexpected implications. Even if most prices are flexible, a small durable goods sector with sticky prices may be sufficient to make aggregate output react to monetary policy as though most prices were sticky. In contrast, flexibly priced durables with sufficiently long service lives can undo the implications of standard sticky price models. In a limiting case, flexibly priced durables cause monetary policy to have no effect on aggregate output. Our analysis suggests that durable goods prices are the most relevant data for calibrating price rigidity. (JEL E21, E23, E31, E52)

publication date

  • May 1, 2007

Date in CU Experts

  • March 12, 2017 3:12 AM

Full Author List

  • Barsky RB; House CL; Kimball MS

author count

  • 3

Other Profiles

International Standard Serial Number (ISSN)

  • 0002-8282

Additional Document Info

start page

  • 984

end page

  • 998

volume

  • 97

issue

  • 3