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In a VAR model of the US, the response of the relative price of durables to a monetary contraction is either flat or mildly positive. It significantly falls only if narrowly defined as the ratio between new house and nondurables prices. These findings survive three identification strategies and...
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inflation than that emanating from interest rate. In contrast, output is largely driven by credit and assets prices shocks. This … contemporaneously to output and inflationary pressures. Inflation is mostly driven by interest rate shock over the medium to long term …
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