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Forward Guidance and Durable Goods Demand / Alisdair McKay, Johannes F. Wieland.
- Format:
- Book
- Author/Creator:
- McKay, Alisdair.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w28066.
- NBER working paper series no. w28066
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2020.
- Summary:
- Durable goods attenuate the power of forward guidance. The extensive and intensive margins of durable goods demand are both more sensitive to the contemporaneous user cost than to future user costs. Changes in the contemporaneous real interest rate directly affect the contemporaneous user cost and durable demand, whereas promises of low future real interest rates have weaker effects through equilibrium price changes. Quantitatively, reducing the real interest rate one year from now increases output by only forty percent as much as reducing the real interest rate today. Our results are little affected by the maturity of financial assets that finance durable purchases.
- Notes:
- Print version record
- November 2020.
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