00000nam 2200000za 4500 9.821811 CaOODSP 20221107143540 cr ||||||||||| 160729s2016 oncd ob f000 0 eng d CaOODSP eng eng fre n-cn--- FB3-5/2016-36E-PDF Kitamura, Tomiyuki. Output comovement and inflation dynamics in a two-sector model with durable goods [electronic resource] : the role of sticky information and heterogeneous factor markets / by Tomiyuki Kitamura and Tamon Takamura. [Ottawa] : Bank of Canada, c2016. iv, 34 p. Staff Working Paper, 1701-9397 ; 2016-36 "July 2016." Includes bibliographical references. In a simple two-sector New Keynesian model, sticky prices generate a counterfactual negative comovement between the output of durable and nondurable goods following a monetary policy shock. We show that heterogeneous factor markets allow any combination of strictly positive price stickiness to generate positive output comovement. Even if the prices of durable goods are flexible, adding sticky information ensures that the output of both sectors moves in the same direction. Furthermore, we find that the combination of sticky information and heterogeneous factor markets produces hump-shaped responses in both sectoral output and inflation, as observed in a vector-autoregression analysis. In contrast to backward indexation to past inflation, which is often assumed in the literature, sticky information leads to a hump-shaped response in the inflation of flexibly priced goods. Finally, the estimated information stickiness through the minimum-distance estimation method suggests that information rigidity is stronger in residential investment than nondurable goods and services. gccst Inflation gccst Prices gccst Monetary policy Takamura, Tamon. Bank of Canada. Staff working paper (Bank of Canada) 1701-9397 ; 2016-36 (CaOODSP)9.806221 PDF 638 KB https://publications.gc.ca/collections/collection_2016/banque-bank-canada/FB3-5-2016-36-eng.pdf