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Consumer Durables and Monetary Policy According to HANK

Author

Listed:
  • 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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