Menu Costs and Phillips Curves

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چکیده

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Menu Costs and Phillips Curves

This paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation. Sellers can change price only by incurring a real “menu cost.” We calibrate this cost and the variance and autocorrelation of the idiosyncratic shock using a new U.S. data set of individual prices due to Klenow and Kryvtsov. The prediction of...

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We have benefitted from discussions with Ariel Burstein, Ricardo Caballero, V.V. Chari, Larry Christiano, Larry Jones, Boyan Jovanovic, Patrick Kehoe, Timothy Kehoe, Bob King, Pete Klenow, Oleksiy Kryvtsov, Ellen McGrattan, Thomas Philippon, Thomas Sargent, Nancy Stokey, Julia Thomas, and Aleh Tsyvinski. Participants in seminars at Chicago, Minnesota, the Federal Reserve Bank of Minneapolis, th...

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We compute the response of output to a monetary shock in a general equilibrium model in which firms set prices subject to a menu cost as well a costly observation of the state. We consider economies that are observationally equivalent with respect to the average frequency and size of price adjustments, and show that these economies respond differently to monetary shocks, depending on the size o...

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ژورنال

عنوان ژورنال: Journal of Political Economy

سال: 2007

ISSN: 0022-3808,1537-534X

DOI: 10.1086/512625