Business cycle implications of internal consumption habit for New Keynesian models
Abstract
This paper studies the implications of internal consumption habit for propagation and monetary transmission in New Keynesian dynamic stochastic general equilibrium (NKDSGE) models. We use Bayesian methods to evaluate the role of internal consumption habit in NKDSGE model propagation and monetary transmission. Simulation experiments show that internal consumption habit often improves NKDSGE model fit to output and consumption growth spectra by dampening business cycle periodicity. Nonetheless, habit NKDSGE model fit is vulnerable to nominal rigidity, the choice of monetary policy rule, the frequencies used for evaluation, and spectra identified by permanent productivity shocks.Download Info
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Paper provided by Federal Reserve Bank of Atlanta in its series Working Paper with number 2009-16.Length:
Date of creation: 2009
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Handle: RePEc:fip:fedawp:2009-16
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- Takashi Kano & James M. Nason, 2010. "Business Cycle Implications of Internal Consumption Habit for New Keynesian Models," CAMA Working Papers 2010-31, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
- Takashi Kano & James M. Nason, 2012. "Business cycle implications of internal consumption habit for new Keynesian models," Working Papers 12-30, Federal Reserve Bank of Philadelphia.
- Takashi Kano & James M. Nason, 2009. "Business Cycle Implications of Internal Consumption Habit for New Keynesian Model," CARF F-Series CARF-F-151, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
- Takashi Kano & James M. Nason, 2009. "Business Cycle Implications of Internal Consumption Habit for New Keynesian Models," CIRJE F-Series CIRJE-F-623, CIRJE, Faculty of Economics, University of Tokyo.
- Kano, Takashi & Nason, James M., 2012. "Business Cycle Implications of Internal Consumption Habit for New Keynesian Models," Discussion Papers 2012-09, Graduate School of Economics, Hitotsubashi University.
- E10 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - General
- E20 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-02 (All new papers)
- NEP-BEC-2009-08-02 (Business Economics)
- NEP-CBA-2009-08-02 (Central Banking)
- NEP-CMP-2009-08-02 (Computational Economics)
- NEP-DGE-2009-08-02 (Dynamic General Equilibrium)
- NEP-MAC-2009-08-02 (Macroeconomics)
- NEP-OPM-2009-08-02 (Open Economy Macroeconomic)
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
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