IMF paper studies monetary impact of household production

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A working paper, published by the International Monetary Fund (IMF) in August, studies the effect of households producing services rather than consuming them in the market, finding that this amplifies monetary shocks.

The author, Constant Lonkeng Ngouana, uses a vector autoregression based on US GDP data over the period 1967–2007, disaggregated into sectors. The paper finds that a monetary expansion raises the real wage, increasing the opportunity cost of producing services at home. Since home

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