Lee E. Ohanian
Alan C. Stockman
Our Research Focus: Economic Growth and Business Cycles
Topics: Business Cycles, Economic Growth
The effects of monetary disturbances differ across sectors when some prices can adjust more rapidly than others. In a model economy with two sectors possessing different speeds of price adjustment, monetary shocks generate inverse movements of real interest rates, alter relative prices, and generate sectoral reallocations of labor. Factors such as the willingness of households to substitute goods across sectors and over time affect the economy's response.
Amanda L. Kramer
(804) 697-8606
Order single copies or subscribe to Economic Quarterly and other publications from the Federal Reserve System.