Price rigidity and price dispersion: evidence from micro data

Abstract

We use large unpublished data set about the prices by store of 381 products collected by the Israeli bureau of statistics during 1991-92 in the process of computing the CPI. On average 24% of the stores changed * This paper benefited from comments provided by the participants of the workshop at the Chicago Fed and by comments provided by Jeff Campbell.

Reconsidering the natural rate hypothesis in a New Keynesian framework

“…Figure 2 depicts the effect of steady-state inflation on output, markup, relative price distortion, and labor. 2 Here, we can find a range of inflation in which the steady-state of parameters to make sure that log-linear and exact non-linear solutions for output hit the origin at zero inflation. For example, substitution elasticity of differentiated goods, denoted by , is set to be very close to 1 with linear utility of labor and log utility function for consumption.…”

Another look at sticky prices and output persistence

“…Households can therefore raise consumption signi…cantly beyond the initial increase in money injection, in anticipation of future money increases, leading to volatile impulse responses in output. But a 3 Erceg and Levin (2003) is an exception.…”

“…It is shown recently by Keen (2004), for example, that the business cycle implications of sticky information proposed by Mankiw and Reis (2002) may not be robust to general equilibrium extensions. 3 This paper takes a step back and asks whether a canonical sticky price model without any additional frictions or real rigidities can generate a reasonable degree of output persistence. Putting it another way, this paper asks why sticky prices by themselves may fail to provide a strong propagate mechanism for the business cycle.…”

Price Setting in a Leading Swiss Online Supermarket

“…Despite the ubiquity of the sticky price assumption, until recently, there was little hard micro-economic evidence on the way in which prices adjust, the frequency at which they adjust, and the determinants of price adjustment. Following Bils and Klenow's (2004) seminal study of the US CPI micro data base however, there has been a rapid growth of new studies of micro price data 1 …”