Andreas Dibiasi : andreas.dibiasi[at]univ-amu.fr
Céline Poilly : celine.poilly[at]univ-amu.fr
We devise tractable heterogeneous-agent New Keynesian economies where households may infrequently participate in financial markets. Both nondurable and durable goods are available for consumption. To the extent that durables feature slow depreciation, a risk-sharing condition emerges, involving all households who can buy both types of consumption goods, irrespective of their financial status. In light of this, factors typically key in shaping monetary transmission in benchmark one-sector economies—such as fiscal transfers from financially unconstrained to constrained households—only affect household-specific durable expenditure, while being otherwise neutral to either type of sectoral demand. When introducing hand-to-mouth consumers with no access to both durable purchases and financial assets, fiscal transfers are no longer purely redistributive— neither at the household nor at the sectoral level—and tend to amplify the response of GDP to monetary shocks, unlike what found in one-sector economies featuring nondurables only.