THE TRANSMISSION OF MONETARY POLICY IN A MULTISECTOR ECONOMY

This article constructs and estimates a sticky-price, Dynamic Stochastic General Equilibrium model with heterogeneous production sectors. Firms in different sectors vary in their price rigidity, production technology, and the combination of material and investment inputs. In particular, firms buy in...

Full description

Saved in:
Bibliographic Details
Published in:International economic review (Philadelphia) 2009-11, Vol.50 (4), p.1243-1266
Main Authors: Bouakez, Hafedh, Cardia, Emanuela, Ruge-Murcia, Francisco J.
Format: Article
Language:English
Subjects:
Consumer Price Index
Economic models
Economics
Estimates
Generalized method of moments
Household consumption
Inflation rates
Mixed economy
Modeling
Monetary policy
Parametric models
Price rigidities
Price shocks
Production
Sectoral planning
Stochastic models
Studies
Time series
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This article constructs and estimates a sticky-price, Dynamic Stochastic General Equilibrium model with heterogeneous production sectors. Firms in different sectors vary in their price rigidity, production technology, and the combination of material and investment inputs. In particular, firms buy inputs from all sectors using the actual Input—Output Matrix and Capital Flow Table of the U.S. economy. By relaxing the standard assumption of symmetry, this model allows idiosyncratic sectoral dynamics in response to monetary policy shocks. The model is estimated by the Generalized Method of Moments using sectoral and aggregate U.S. time series.
ISSN:0020-6598
1468-2354
DOI:10.1111/j.1468-2354.2009.00567.x