In menu cost models, real effects of aggregate nominal shocks are sensitive to unobserved characteristics of price setting. The standard way to calibrate key pricing parameters is to match the cross-sectional distribution of price changes. We argue that this unconditional distribution contains insufficient information for a clean identification. In particular, it is consistent with parameterizations with contradictory aggregate implications: one generating sizeable real effects, the other effective money neutrality. We argue, instead, that price change observations conditional on aggregate shocks can be sufficiently informative. To show this, we utilize new micro level evidence on price responses to large value-added tax shocks. We present a new menu cost model with idiosyncratic shocks and show that our model successfully predicts the magnitude of the observed price responses, outperforming alternative pricing models. The new model generates small real effects of monetary policy shocks implying that imposing the menu cost assumption alone fails to explain robust timeseries evidence finding the opposite. JEL codes: E31, E52

This paper uses Hungarian micro-CPI data between December 2001 and June 2007 to provide descriptive statistics of store-level pricing practices in Hungary. First we present simple descriptive statistics about the frequency and average size of price changes, and compare it with similar statistics from other countries. Then we decompose the observed variations in the inflation rate to variations in frequencies and sizes. Finally, we estimate the inflation effects of three general VAT-rate changes during our sample period. Copyright © 2009 John Wiley & Sons, Ltd.

Grocery prices in the euro area: Findings from informal ESCN expert group to analsyse a disaggregated price dataset This paper was prepared as part of a Eurosystem project group established to analyse a large-scale disaggregated dataset on grocery prices in the euro area. This proprietary dataset was obtained as a follow up to the 2011 Eurosystem Structural Issues Report (SIR) entitled "Structural features of the distributive trades and their impact on prices in the euro area". The main motivation for obtaining these data was to enable the analysis of a variety of issues that was previously not possible owing to data limitations. More specifi cally (i) analysis of Single Market issues and quantifi cation of border effects (ii) measuring the impact of competition -both at the producer and retail level -on consumer price levels and (iii) consider potential implications for infl ation measurement arising from structural changes in retail sector such as the growing importance of discounters and private label brands.The data were obtained from Nielsen, an international market information and measurement company. The dataset is multi-dimensional with approximately 3.5 million observations each for the price, value and volume variables across a number of dimensions (13 countries; approximately 45 product categories; approximately 70 regions; approximately 10 store types on average per country; 4 brands per product category and 3 stock-keeping units -skus -per brand). The data are generally collected from barcode scanners. These cross country data are unique in a number of respects, in particular in that (a) there are data on average price levels across regions within countries, (b) there is information on both prices and volumes, and (c) there are data on aggregated private label sales and prices. The data have been cross-checked against HICP and PPP data and found to be highly congruent.The expert group was chaired by Bob Anderton (ECB) and Aidan Meyler (ECB) acted as Secretary. We are also grateful to Stefanos Dimitrakopoulos (Warwick University) who, whilst at the ECB as a trainee, provided invaluable assistance in compiling and working with the database.Preliminary results from the project group were initially presented at an informal Eurosystem workshop which took place in Frankfurt on 22 November 2013. Apart from the members of the expert group a small number of external participants were invited to the workshop. The following participants acted as discussants: Mario Crucini

The 2022 Russian invasion of Ukraine is a watershed moment in European politics. An immediate consequence of the invasion was a massive influx of refugees into Central Europe, a region in which immigration has proven highly contentious and politically salient over the past thirty years. We study public opinion towards refugees in Hungary, a highly exclusionary political environment in which anti-migrant and anti-refugee sentiments are commonly invoked by the ruling government. Combining historical public opinion data from the past decade with original survey data collected in April 2022, we demonstrate that the Ukrainian refugee crisis was accompanied by a large increase in tolerance for refugees, reversing what had previously been one of the most anti-refugee public opinion environments in Europe. To explain this reversal, we use a series of survey experiments to investigate how conflict proximity and racial, religious, and national identity (three manifestations of what we term civilizational characteristics) shape openness to refugees. We find that the distinguishing feature of the 2022 refugee crisis was that refugees were mostly white European Christians driven from their home country by conflict. We discuss the implications of our argument for Hungary, for European politics in times of crisis, and for the politics of public opinion in competitive authoritarian regimes.

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