Essays on Durable Goods and Housing in New Keynesian Models
While they are widely used for policy, two sector New Keynesian models with flexibly priced durable goods are rejected by the data. After a monetary policy shock,these models typically demonstrate negative co-movement between durable and nondurable consumption. This is completely at odds with VAR evidence which suggests that they co-move positively (and that durable good consumption is substantially more sensitive than non-durable good consumption to the...[Show more]
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