Reset Price Inflation and the Impact of Monetary Policy Shocks
Many business cycle models use aflat short-run Phillips curve, due to time-dependent pricing and strategic complementarities, to explain fluctuations in real output But, in doing so, these models predict unrealistically high persistence and stability of US inflation in recent decades. We calculate &...
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| Veröffentlicht in: | The American economic review 2012-10, Vol.102 (6), p.2798-2825 |
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| container_end_page | 2825 |
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| container_title | The American economic review |
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| creator | Bils, Mark Klenow, Peter J. Malin, Benjamin A. |
| description | Many business cycle models use aflat short-run Phillips curve, due to time-dependent pricing and strategic complementarities, to explain fluctuations in real output But, in doing so, these models predict unrealistically high persistence and stability of US inflation in recent decades. We calculate "reset price inflation"—based on new prices chosen by the subsample of price changers—to dissect this discrepancy. We find that the models generate too much persistence and stability both in reset price inflation and in the way reset price inflation is converted into actual inflation. Our findings present a challenge to existing explanations f or business cycles. |
| doi_str_mv | 10.1257/aer.102.6.2798 |
| format | Article |
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We calculate "reset price inflation"—based on new prices chosen by the subsample of price changers—to dissect this discrepancy. We find that the models generate too much persistence and stability both in reset price inflation and in the way reset price inflation is converted into actual inflation. 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| fulltext | fulltext |
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| source | EBSCOhost Business Source Complete; JSTOR Archive Collection A-Z Listing; American Economic Association Web |
| subjects | Business cycles Consumer Price Index Correlations Economic fluctuations Economic inflation Economic stability Inflation Inflation rates Inflation shocks Inflation theory Kinked demand Markups Modeling Monetary policy Output Phillips curve Price changes Price shocks Price uncertainty Sampling errors Standard deviation Strategic behaviour Studies U.S.A Volatility |
| title | Reset Price Inflation and the Impact of Monetary Policy Shocks |
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