Implications of state-dependent pricing for dynamic macroeconomic models

• 成果类型: Article; Proceedings Paper
• 署名作者: Dotsey, M; King, RG
• 署名单位: Boston University; Federal Reserve System - USA; Federal Reserve Bank - Philadelphia
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2004.10.004
• 发表日期: 2005
• 页码: 213-242
• 关键词: Pricing; macroeconomic models

摘要

State-dependent pricing (SDP) models treat the timing of price changes as a profit-maximizing choice, symmetrically with other decisions of firms. Using quantitative general equilibrium models which incorporate a generalized (S,s) approach, we investigate the implications of SDP for topics in two major areas of macroeconomic research. the early 1990s SDP literature and more recent work on persistence mechanisms. First. we show that state-dependent pricing leads to unusual macroeconomic dynamics. which occur because of the timing of price adjustments chosen by firms as in the earlier literature. In particular, we display an example in which output responses peak at about a year. while inflation responses peak at about 2 years after the shock. Second, we examine whether the persistence-enhancing effects of two New Keynesian model features, namely specific factor markets and variable elasticity demand curves, depend importantly on whether pricing is state dependent. In an SDP setting. we provide examples in which specific factor markets perversely work to lower persistence, while variable elasticity demand raises it. (C) 2004 Published by Elsevier B.V.