Asymmetric Price Adjustment In a Menu-Cost Model
نویسندگان
چکیده
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 Khalil are gratefully acknowledged.
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