The Transmission of Monetary Policy in a Multisector Economy

24 Pages Posted: 28 Oct 2009

See all articles by Hafedh Bouakez

Hafedh Bouakez

HEC Montréal

Emanuela Cardia

University of Montreal - Center for Research and Development in Economics

Francisco J. Ruge-Murcia

University of Montreal - Department of Economics; University of Montreal - Center for Interuniversity Research in Econometrics

Abstract

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.

Suggested Citation

Bouakez, Hafedh and Cardia, Emanuela and Ruge-Murcia, Francisco J., The Transmission of Monetary Policy in a Multisector Economy. International Economic Review, Vol. 50, Issue 4, pp. 1243-1266, November 2009. Available at SSRN: https://ssrn.com/abstract=1495275 or http://dx.doi.org/10.1111/j.1468-2354.2009.00567.x

Hafedh Bouakez (Contact Author)

HEC Montréal ( email )

3000, chemin de la Côte-Sainte-Catherine
Montréal, Québec H3T 2A7
Canada
1-514-340-7003 (Phone)
1-514-340-6469 (Fax)

Emanuela Cardia

University of Montreal - Center for Research and Development in Economics ( email )

Montreal, Quebec H3T 1B9
Canada

Francisco J. Ruge-Murcia

University of Montreal - Department of Economics ( email )

C.P. 6128, succursale Centre-Ville
Montreal, Quebec H3C 3J7
Canada

University of Montreal - Center for Interuniversity Research in Econometrics ( email )

C.P. 6128, Succursale Centre-ville
Montreal, Quebec H3C 3J7
Canada

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