https://macropaperwarehouse.com/authors/ivan-petrella/Ivan PetrellaHugo -- gohugo.ioen-ushttps://macropaperwarehouse.com/papers/consumer-durables-and-monetary-policy-according-to-hank/https://macropaperwarehouse.com/papers/consumer-durables-and-monetary-policy-according-to-hank/<h3 id="research-question">Research Question</h3> <p>Consumer durables account for a disproportionately large share of household expenditure fluctuations despite their small share of total private consumption. Two stylized facts motivate the paper: (1) durable expenditure is far more interest-rate sensitive than nondurable expenditure following monetary policy shocks, and (2) durable and nondurable expenditures comove positively and persistently—both reaching trough in the same quarter. Standard two-sector New Keynesian models struggle to generate this positive conditional comovement because asymmetric sectoral price rigidity induces large relative-price movements that push the two sectors in opposite directions. This paper asks what model features are necessary and sufficient to reproduce both the sectoral comovement pattern and the hump-shaped aggregate dynamics observed in the data, and how the answer changes across households sorted by liquid asset holdings.</p>