Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95274
Authors: 
Di Bartolomeo, Giovanni
Rossi, Lorenza
Tancioni, Massimiliano
Year of Publication: 
2009
Series/Report no.: 
Quaderni di Dipartimento 101
Abstract: 
This paper extends the standard New Keynesian dynamic stochastic general equilibrium (DSGE) model to agents who cannot smooth consumption (i.e. spenders) and are affected by external consumption habits. Although these assumptions are not new, their joint consideration strongly affects some theoretical and empirical results addressed by the recent literature. By deriving closed-form solutions, we identify different demand regimes and show that they are characterized by specific features regarding dynamic stability and monetary policy effectiveness. We also evaluate our model by stochastic simulations obtained from the Bayesian parameters estimates for the G7 economies. From posterior impulse responses we address the empirical relevance of the different regimes and provide comparative evidence on the heterogeneity of monetary policy effects among countries.
Subjects: 
Rule-of-thumb
habits
monetary policy transmission
determinacy
New Keynesian DSGE model
monetary policy
Monte Carlo Bayesian estimators
JEL: 
E61
E63
Document Type: 
Working Paper

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