Nominal Rigidities, Monetary Policy and Pigou Cycles

Datos Bibliográficos

ID9706720
AutoresStéphane Auray (CREST/Ensai, Université du Littoral Côte d’Opale (EQUIPPE), GREDI and CIRPEE), Paul Gomme (0000-0001-6649-8647, Concordia University and CIREQ), Shen Guo (Central University of Finance and EconomicsBeijing)
Año2013
Volumen123
Número568
Páginas455-473
Fecha de publicación2013-05-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaThe Economic Journal (JOURNAL)
Identificadores de la revistaISSN: 0013-0133 • E-ISSN: 1468-0297
EditorialOxford University Press (OUP) (PUBLISHER)
DOI10.1111/ecoj.12000
OpenAlexW2238958196
IdiomaEN
Citas recibidas1
Referencias citadas23

Capturing the boom phase of Pigou cycles and resolving the comovement problem require positive sectoral comovement. This article addresses these observations using a two‐sector New Keynesian model. Price rigidities dampen movements in the relative price of durables following a monetary policy shock. Durables and non‐durables are estimated to be complements in utility, allowing for a resolution of the comovement problem for modest degrees of price rigidity. Nominal rigidities also make firms forward‐looking in their pricing behaviour, which leads to relative price dynamics that generate positive sectoral comovement in the boom phase of a Pigou cycle

Boom · Business cycle · Economics · Inflation (cosmology · Keynesian economics · Macroeconomics · Monetary economics · Monetary policy · New Keynesian economics · Pigou effect · Rational expectations · Shock (circulatory · Economic theories and models · Economic Theory and Policy · Monetary Policy and Economic Impact