Format:
Online-Ressource
ISSN:
1534-6005
Content:
Abstract: There is ample evidence that the frequency of price adjustments differs substantially across sectors. This paper introduces sectoral heterogeneity in price stickiness into an otherwise standard sticky price model to study how it affects the dynamics of monetary economies. Qualitative and quantitative results from a realistic calibration for the U.S. economy show that monetary shocks tend to have larger and more persistent real effects in heterogeneous economies, when compared to identical-firms economies with similar degrees of nominal and real rigidity. In the presence of strategic complementarities in price setting, sectors with lower frequencies of price adjustment have a disproportionate effect on the aggregate price level. In order to better approximate the dynamics of the calibrated heterogeneous economy, an identical-firms model requires a frequency of price changes that is up to three times lower than the average of the heterogeneous economy.
In:
volume:6
In:
number:1
In:
year:2006
In:
extent:58
In:
Contributions to macroeconomics, Berkeley, Calif. : Bepress, 2001-2006, 6, Heft 1 (2006) (gesamt 58), 1534-6005
Language:
English
DOI:
10.2202/1534-6021.1320
URN:
urn:nbn:de:101:1-2408151644077.753875057621
URL:
https://doi.org/10.2202/1534-6021.1320
URL:
https://nbn-resolving.org/urn:nbn:de:101:1-2408151644077.753875057621
URL:
https://d-nb.info/1339111969/34
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