In:
American Economic Journal: Macroeconomics, American Economic Association, Vol. 13, No. 1 ( 2021-01-01), p. 216-256
Abstract:
We develop a multisector sticky-price DSGE model that can endogenously deliver differential responses of prices to aggregate and sectoral shocks. Input-output production linkages and a (standard) monetary policy rule contribute to a slow response of prices to aggregate shocks. In turn, labor market segmentation at the sectoral level induces within-sector strategic substitutability in price-setting decisions, which helps the model deliver a fast response of prices to sector-specific shocks. We estimate the model using aggregate and sectoral price and quantity data for the United States and find that it accounts well for a range of sectoral price facts. (JEL E12, E21, E31, E32, E43, E52)
Type of Medium:
Online Resource
ISSN:
1945-7707
,
1945-7715
DOI:
10.1257/mac.20190205
Language:
English
Publisher:
American Economic Association
Publication Date:
2021
detail.hit.zdb_id:
2452641-1
detail.hit.zdb_id:
2442376-2
