Output Comovement and Inflation Dynamics in a Two‐Sector Model with Durable Goods: The Role of Sticky Information and Heterogeneous Factor Markets

In the United States, inflation and output of durable nondurable goods respond to a monetary policy shock in same direction with delay. However, existing New Keynesian dynamic stochastic general equilibrium models that generate positive comovement cannot explain this delayed response sectoral inflation. We show adding sticky information both along heterogeneous factors production can observed patterns output. Moreover, line recent empirical findings, estimated stickiness is larger for housing than services.