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THE TRANSMISSION OF MONETARY POLICY IN A MULTISECTOR ECONOMY *
Author(s) -
Bouakez Hafedh,
Cardia Emanuela,
RugeMurcia Francisco J.
Publication year - 2009
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2009.00567.x
Subject(s) - economics , monetary policy , general equilibrium theory , production (economics) , aggregate (composite) , investment (military) , monetary economics , capital (architecture) , macroeconomics , econometrics , economy , history , materials science , archaeology , politics , political science , law , composite material
This article constructs and estimates a sticky‐price, Dynamic Stochastic General Equilibrium model with heterogeneous production sectors. Firms in different sectors vary in their price rigidity, production technology, and the combination of material and investment inputs. In particular, firms buy inputs from all sectors using the actual Input–Output Matrix and Capital Flow Table of the U.S. economy. By relaxing the standard assumption of symmetry, this model allows idiosyncratic sectoral dynamics in response to monetary policy shocks. The model is estimated by the Generalized Method of Moments using sectoral and aggregate U.S. time series.