Shocks vs Menu Costs: Patterns of Price Rigidity in an Estimated Multi-Sector Menu-Cost Model
نویسندگان
چکیده
منابع مشابه
Menu costs , firm size and price rigidity
If menu costs have a non-negligible lump-sum component and with larger firms having greater benefits from price adjustments, then larger firms will change price more frequently than smaller firms. Data from New Zealand firms support this hypothesis. Price duration decreases as firm size increases. Ordered probit analysis indicates the effect comes primarily from larger firms being more likely t...
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Empirical evidence suggests that as much as 1/3 of the U.S. business cycle is due to nominal shocks. We calibrate a multi-sector menu cost model using new evidence on the cross-sectional distribution of the frequency and size of price changes in the U.S. economy. We augment the model to incorporate intermediate inputs. We show that the introduction of heterogeneity in the frequency of price cha...
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We compute the impulse response of output to an aggregate monetary shock in a general equilibrium when firms set prices subject to a costly observation of the state and a menu cost. We study how the aggregate effects of a monetary shock depend on the relative size of these costs. We find that empirically reasonable observations costs increase the impact and the persistence of the output respons...
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In this paper we demonstrate that the menu-cost model implies asymmetric price adjustment to nominal demand shocks and that the asymmetry is linked to the elasticity of demand and menu costs. These are tested using manufacturing and retailing panel data for the OECD countries. The empirical results give strong support to the menu-cost model. JEL Classification: E3, L16 * Comments from Fhahad Kh...
متن کاملMenu Costs and Asymmetric Price Adjustment
We study optimal price setting by a monopolist in an in nite horizon model with stochastic costs, moderate ination, and costly price adjustment. For realistic parameters, chosen to replicate observed frequencies of price changes, the model ts numerically several empirical regularities. In particular, price reductions are larger but less frequent than price increases, and prices respond consid...
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ژورنال
عنوان ژورنال: The Review of Economics and Statistics
سال: 2020
ISSN: 0034-6535,1530-9142
DOI: 10.1162/rest_a_00968