Journal Article
The weakened influence of low interest rates on durable goods spending
Van Zandweghe, Willem; Braxton, John Carter (2013-11)
Despite record-low interest rates, the pace of the current economic recovery has been only moderate. One reason is that the positive impact of lowered interest rates on consumer purchases of durable goods has diminished
Macro Bulletin

Journal Article
Has durable goods spending become less sensitive to interest rates?
Van Zandweghe, Willem; Braxton, John Carter (2013-10)
Despite record-low interest rates, the pace of the current economic recovery has been only moderate. One reason is that the positive impact of lowered interest rates on consumer purchases of durable goods has diminished. Comparing the current economic recovery with those that followed the recessions of 1981-82, 1990-91 and 2001, Van Zandweghe and Braxton explore the way movements in key interest rates have affected consumer spending on durable goods. They find that if the boost from lowered interest rates to durable goods spending in the current recovery had stayed as strong as it was on ...
Economic Review , Issue Q IV , Pages 5-27

Report
Lumpy Durable Consumption Demand and the Limited Ammunition of Monetary Policy
Wieland, Johannes F.; McKay, Alisdair (2021-02-16)
The prevailing neo-Wicksellian view holds that the central bank's objective is to track the natural rate of interest (r*), which itself is largely exogenous to monetary policy. We challenge this view using a fixed-cost model of durable consumption demand, in which expansionary monetary policy prompts households to accelerate purchases of durable goods. This yields an intertemporal trade-off in aggregate demand as encouraging households to increase durable holdings today leaves fewer households acquiring durables going forward. Interest rates must be kept low to support demand going forward, ...
Staff Report , Paper 622