Business Cycle Implications of Internal Consumption Habit for New Keynesian Models

B-Tier
Journal: Journal of Money, Credit, and Banking
Year: 2014
Volume: 46
Issue: 2-3
Pages: 519-544

Score contribution per author:

1.005 = (α=2.01 / 2 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We study the implications of internal consumption habit for New Keynesian dynamic stochastic general equilibrium (NKDSGE) models. Bayesian Monte Carlo methods are employed to evaluate NKDSGE model fit. Simulation experiments show that internal consumption habit often improves the ability of NKDSGE models to match the spectra of output and consumption growth. Nonetheless, the fit of NKDSGE models with internal consumption habit is susceptible to the sources of nominal rigidity, to spectra identified by permanent productivity shocks, to the choice of monetary policy rule, and to the frequencies used for evaluation. These vulnerabilities indicate that the specification of NKDSGE models is fragile.

Technical Details

RePEc Handle
repec:wly:jmoncb:v:46:y:2014:i:2-3:p:519-544
Journal Field
Macro
Author Count
2
Added to Database
2026-01-25