Price stickiness and the contractionary effect of technology shocks

Marchetti, Domenico J.; Nucci, Francesco

doi:10.1016/j.euroecorev.2003.08.012

Cited by 107 publications

(27 citation statements)

References 24 publications

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“…Guiso and Parigi (1999) merge data on capital stock, income, and cash flow (CADS) with data on effective and planned investment and on expected demand (SIM) to investigate the effects of uncertainty on the investment decision of a sample of Italian manufacturing firms. Marchetti and Nucci (2005) use data on employment and hours, labor compensation, investment, and capital stock (SIM) and use them together with information on sales, inventory change, and purchases of intermediate goods (CADS) to obtain a measure of technological change that is not affected by any source of procyclical productivity. Marchetti and Nucci (2004) merge the two datasets to obtain detailed statistics on the typical frequency of price revision of a sample of Italian manufacturing firms and to investigate whether different degrees of price stickiness affect how a technological shock influences the use of the labor input in the production process.…”

Section: The Datamentioning

confidence: 99%

Is There a Cost Channel of Monetary Policy Transmission? An Investigation into the Pricing Behavior of 2,000 Firms

Gaiotti¹,

Secchi²

2006

Journal of Money, Credit, and Banking

209

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The paper exploits a unique panel, covering some 2,000 Italian manufacturing firms and 14 years of data on individual prices and individual interest rates paid on several types of debt, to address the question of the existence of a channel of transmission of monetary policy operating through the effect of interest expenses on the marginal cost of production. It has been argued that this mechanism may explain the dimension of the real effects of monetary policy, give a rationale for the positive short-run response of prices to interest rate increases (the "price puzzle") and call for a more gradual monetary policy response to shocks. We find robust evidence in favor of the presence of a cost channel of monetary policy transmission, proportional to the amount of working capital held by each firm. The channel is large enough to have non-trivial monetary policy implications.JEL codes: E52, E31

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Section: The Datamentioning

confidence: 99%

Is There a Cost Channel of Monetary Policy Transmission? An Investigation into the Pricing Behavior of 2,000 Firms

Gaiotti¹,

Secchi²

2006

Journal of Money, Credit, and Banking

209

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“…Lastly, for comparison with the results in Marchetti and Nucci (2005) based on the Olley and Pakes (1996) methodology, we report estimates based on the shocks to TFP not corrected for variable utilisation rate in part (4) of Table 4.…”

Section: Robustness Testsmentioning

confidence: 99%

Rigid Labour Compensation and Flexible Employment ? Firm-Level Evidence with Regard to Productivity for Belgium

Fuss

Wintr

2009

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in WO R K I N G PA PE R S E R I E S N O 1021 / M A R C H 20 0 9This paper can be downloaded without charge from http://www.ecb.europa.eu or from the Social Science Research Network electronic library at http://ssrn.com/abstract_id=1337486.In 2009 all ECB publications feature a motif taken from the €200 banknote. RIGID LABOUR COMPENSATION AND FLEXIBLE EMPLOYMENT? FIRM-LEVEL EVIDENCE WITH Wage Dynamics NetworkThis paper contains research conducted within the Wage Dynamics Network (WDN). The WDN is a research network consisting of economists from the European Central Bank (ECB) and the national central banks (NCBs) of the EU countries. The WDN aims at studying in depth the features and sources of wage and labour cost dynamics and their implications for monetary policy. The specific objectives of the network are: i) identifying the sources and features of wage and labour cost dynamics that are most relevant for monetary policy and ii) clarifying the relationship between wages, labour costs and prices both at the firm and macro-economic level.The WDN is chaired by Frank Smets (ECB). Giuseppe Bertola (Università di Torino) and Julian Messina (Universitat de Girona) act as external consultants and Ana Lamo (ECB) as Secretary.The refereeing process of this paper has been co-ordinated by a team composed of Gabriel Fagan (ECB, chairperson), Philip Vermeulen (ECB), Giuseppe Bertola, Julian Messina, Jan Babecký (CNB), Hervé Le Bihan (Banque de France) and Thomas Mathä (Banque centrale du Luxembourg).The paper is released in order to make the results of WDN research generally available, in preliminary form, to encourage comments and suggestions prior to final publication. The views expressed in the paper are the author's own and do not necessarily reflect those of the ESCB. ECB Working Paper Series No 1021March 2009 Abstract 4 Non-technical summary 5

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“…First, Gali (1999) and Basu et al (2006) propose sticky prices as a plausible explanation for the negative response of hours worked to a technological improvement-a fixed price implies unchanged real sales so that less labor is required to meet a given demand. Following Marchetti and Nucci (2005) and Chang and Hong (2006), we include the average duration of output price (duration) as a measure of price stickiness in the set of explanatory variables. It is obtained from Bils and Klenow's (2004) price data, which are based on unpublished price quotes collected by the BLS over the period 1995-1997.…”

Section: Relation Between Sectoral Characteristics and Employment Resmentioning

confidence: 99%

“…Both Gali (1999) and Basu et al (2006) propose sticky prices as the main reason for the contractionary impact of technology shocks. Carlsson (2003) and Marchetti and Nucci (2005) apply Basu et al's identification scheme to Swedish and Italian manufacturing data, respectively. They also confirm the negative impact of technology shocks on hours worked and its close relation to sticky prices by showing that the contractionary effect of a technology shock is more pronounced for firms with stickier prices.…”

Section: Introductionmentioning

confidence: 99%

Employment responses to aggregate and sectoral technology shocks

Park

2012

Journal of Macroeconomics

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Price stickiness and the contractionary effect of technology shocks

Cited by 107 publications

References 24 publications

Is There a Cost Channel of Monetary Policy Transmission? An Investigation into the Pricing Behavior of 2,000 Firms

Is There a Cost Channel of Monetary Policy Transmission? An Investigation into the Pricing Behavior of 2,000 Firms

Rigid Labour Compensation and Flexible Employment ? Firm-Level Evidence with Regard to Productivity for Belgium

Employment responses to aggregate and sectoral technology shocks

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