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Consumer Durables and Monetary Policy According to HANK

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  • Emil Holst Partsch
  • Ivan Petrella
  • Emiliano Santoro

Abstract

Durable and nondurable consumption comovement is central to monetary policy trans mission. Using a two-sector Heterogeneous Agent New Keynesian model, we generate re alistic sectoral comovement while capturing key household spending patterns. Both direct and indirect effects matter: intertemporal substitution strongly influences durable spend ing, while income effects drive persistence in nondurable responses. Comovement also extends to households sorted by liquid asset holdings. Distinguishing transmission chan nels is crucial for understanding the macroeconomic impact of targeted fiscal policies, as subsidies for durable goods purchases.

Suggested Citation

  • Emil Holst Partsch & Ivan Petrella & Emiliano Santoro, 2025. "Consumer Durables and Monetary Policy According to HANK," Carlo Alberto Notebooks 736 JEL Classification: E, Collegio Carlo Alberto.
    • Handle: RePEc:cca:wpaper:736
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    References listed on IDEAS

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    3. Young, Eric R., 2010. "Solving the incomplete markets model with aggregate uncertainty using the Krusell-Smith algorithm and non-stochastic simulations," Journal of Economic Dynamics and Control, Elsevier, vol. 34(1), pages 36-41, January.
    4. Orazio P. Attanasio & James Banks & Sarah Tanner, 2002. "Asset Holding and Consumption Volatility," Journal of Political Economy, University of Chicago Press, vol. 110(4), pages 771-792, August.
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    6. Erceg, Christopher J. & Henderson, Dale W. & Levin, Andrew T., 2000. "Optimal monetary policy with staggered wage and price contracts," Journal of Monetary Economics, Elsevier, vol. 46(2), pages 281-313, October.
    7. Adrien Auclert & Bence Bardóczy & Matthew Rognlie & Ludwig Straub, 2021. "Using the Sequence‐Space Jacobian to Solve and Estimate Heterogeneous‐Agent Models," Econometrica, Econometric Society, vol. 89(5), pages 2375-2408, September.
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