Housing, Wealth Effects, and Monetary Policy

Kwang Hwan Kim, Munechika Katayama

Research output: Contribution to journalArticle

Abstract

This paper examines the role that wealth effects on labour supply play in a two-sector sticky-price model that includes non-durables and housing. Careful analysis of a two-sector sticky-price model reveals that whether there are wealth effects on labour supply fundamentally changes the nature of the model in a way that has not been fully appreciated. In the presence of wealth effects on labour supply, as Barsky et al. study demonstrate, the pricing of housing is central to the behaviour of the model, whereas price rigidity in the non-durable goods sector is much less important. In the absence of these wealth effects, by contrast, the behaviour of the model depends critically on whether the non-durable goods, not the new housing, themselves have sticky prices.

Original languageEnglish
Pages (from-to)55-71
Number of pages17
JournalGlobal Economic Review
Volume42
Issue number1
DOIs
Publication statusPublished - 2013 Mar
Externally publishedYes

Fingerprint

monetary policy
housing
labor supply
product life cycle
rigidity
pricing
Wealth effect
Monetary policy
Housing wealth
Labor supply
Sticky prices

Keywords

  • durables
  • neutrality
  • Sticky prices

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business and International Management
  • Political Science and International Relations

Cite this

Housing, Wealth Effects, and Monetary Policy. / Kim, Kwang Hwan; Katayama, Munechika.

In: Global Economic Review, Vol. 42, No. 1, 03.2013, p. 55-71.

Research output: Contribution to journalArticle

Kim, Kwang Hwan ; Katayama, Munechika. / Housing, Wealth Effects, and Monetary Policy. In: Global Economic Review. 2013 ; Vol. 42, No. 1. pp. 55-71.
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