Kim, Kwang Hwan; Katayama, Munechika - In: Journal of Economic Dynamics and Control 37 (2013) 9, pp. 1715-1735
This paper resolves the sectoral comovement problem between nondurable and durable outputs that arises in response to a monetary shock in a two-sector sticky price model with flexibly priced durable goods. We analytically demonstrate that the non-separability between aggregate consumption and...