Incomplete cost pass-through under deep habits
نویسندگان
چکیده
منابع مشابه
Incomplete cost pass-through under deep habits
Article history: Received 25 November 2008 Revised 23 May 2009 Available online 11 June 2009 JEL classification: D1 D4 L1
متن کاملNber Working Paper Series Incomplete Cost Pass-through under Deep Habits
A number of empirical studies document that marginal cost shocks are not fully passed through to prices at the firm level and that prices are substantially less volatile than costs. We show that in the relative-deep-habits model of Ravn, Schmitt-Grohe, and Uribe (2006), firm-specific marginal cost shocks are not fully passed through to product prices. That is, in response to a firm-specific inc...
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We propose a candidate solution to the imperfect exchange rate passthrough puzzle: habit persistence at the level of individual goods varieties. Deep habits generate a dynamic import demand function that leads to import price markup adjustments, independently of nominal pricing frictions. Augmenting a standard two-country model with deep habits, we obtain low exchange rate pass-through to impor...
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The rate of cost pass-through exceeds 50% under strategic delegation of decision-making to managers with sales revenue contracts regardless of the number of rms in the industry and demand curvature. This contrasts sharply with pro t-maximization, for which cost pass-through can take on any positive value. The key intuition is that rms under delegation act as if they faced more rivals than th...
متن کاملFirms’ Heterogeneity and Incomplete Pass-Through
A large body of empirical work documents that prices of traded goods change by a smaller proportion than real exchange rates between the trading countries (incomplete pass-through). The wedge between exchange rates and relative prices also varies across countries (pricing-tomarket). I present a model of trade and international price-setting with heterogeneous firms, where firms’ strategic behav...
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ژورنال
عنوان ژورنال: Review of Economic Dynamics
سال: 2010
ISSN: 1094-2025
DOI: 10.1016/j.red.2009.06.001