Setting the right prices for the wrong reasons

• 成果类型: Article; Proceedings Paper
• 署名作者: Hellwig, Christian; Venkateswaran, Venky
• 署名单位: University of California System; University of California Los Angeles; Centre for Economic Policy Research - UK
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2009.06.013
• 发表日期: 2009
• 页码: S57-S77
• 关键词: Real effects of nominal shocks; Price setting; incomplete information

摘要

Nominal price adjustment is studied in an environment with firm-specific and aggregate shocks to economic fundamentals and incomplete, dispersed information. Firms update their expectations about fundamentals based on their own cash flows (revenues and wages). We show that in a model with realistic levels of product-level price dispersion, the firms' inference about aggregate shocks is very gradual, yet in the aggregate prices adjust rapidly in response to aggregate nominal shocks. When an aggregate shock occurs, firms mistakenly attribute it to firm-specific shocks, but adjust prices nevertheless, since the exact nature of the shock matters little for their optimal pricing decision. (C) 2009 Elsevier B.V. All rights reserved.