Menu Costs, Aggregate Fluctuations, and Large Shocks

• 成果类型: Article
• 署名作者: Karadi, Peter; Reiff, Adam
• 署名单位: European Central Bank; Center for Economic & Policy Research (CEPR)
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20160054
• 发表日期: 2019
• 页码: 111-146
• 关键词: multiproduct firms; price adjustment; business cycles; Synchronization; DYNAMICS; money

摘要

We document that the aggregate price level responds flexibly and asymmetrically to large positive and negative value-added tax changes. We present a price-setting model with menu costs, trend inflation, and fat-tailed product-level shocks that is consistent with these observations. The model predicts a flexible price-level response to standard monetary policy shocks because it anticipates a large number of firms on the verge of price adjustment and far from their optimal prices when the shock hits.