International Trade in Durable Goods in Sticky Price Models
نویسندگان
چکیده
Engel and Wang (2008) argue that trade in durable goods is important for international real-businesscycle models to replicate the behavior of real imports and exports. We extend such a model with Calvostyle price stickiness. We find that the model with producer currency pricing (PCP) for investment goods and local currency pricing (LCP) for durable consumption performs better than the model with PCP or LCP only in matching the trade sector data. Price stickiness brings the cross-country correlations of output and consumption closer to the data, though the consumption correlation is still much lower than in the data. JEL Classifications: E32 F3 F4
منابع مشابه
Do Flexible Durable Goods Prices Undermine Sticky Price Models?
The “neoclassical synthesis” sticky price model exhibits strange behavior when augmented with markets for durable goods with flexible prices. While in the data the output of durable goods responds strongly and positively to a loosening of monetary policy, in dynamic general equilibrium models a monetary expansion causes the output of flexibly priced durables to contract. In an instructive speci...
متن کاملThe International Diversification Puzzle When Goods Prices Are Sticky : It ’ s Really about Exchange - Rate
I n an open macroeconomy, in which asset trade is possible, the portfolio choice of households may play an important role in understanding macro fluctuations. In contrast to a closed economy model, in which a representative agent simply holds the market portfolio, agents in each country may hold different portfolios depending on the country-specific risks and returns that they encounter. Robert...
متن کاملDurable Goods and Sectoral Effects of Monetary Policy
High degree of interest sensitivity of durable goods is now a stylized fact in the literature of monetary policy. This literature, however, does not provide a clear and consensual explanation for the modalities of this stylized fact. In this paper, two independent empirical models are performed to shed more light on the cross-sectoral impacts of monetary policy. The results of first study indic...
متن کاملModelling the Heterogeneous Price Setting Behavior of Firms (DSGE Approach)
Despite the empirical evidence of the difference in the degree of price stickiness of goods and services, in the new standard Keynesian models, the same price stickiness is considered for all firms producing intermediate goods. In recent years, a new generation of pricing models has been introduced to simulate the heterogeneous price setting behavior in which, unlike standard pricing models, th...
متن کاملA model of brand competition for durable goods supply chains in a dynamic framework
Game theory is an efficient tool to represent and conceptualize the problems concerning conflict and competition. In recent years and especially for durable products, competition between domestic and foreign brands for gaining market share has received a considerable attention. This paper study electronic commerce concepts by differential game theory and introduce a novel and comprehensive mode...
متن کامل