FROM HYPERINFLATION TO STABLE PRICES: ARGENTINA'S EVIDENCE ON MENU COST MODELS

• 成果类型: Article
• 署名作者: Alvarez, Fernando; Beraja, Martin; Gonzalez-Rozada, Martin; Andres Neumeyer, Pablo
• 署名单位: University of Chicago; National Bureau of Economic Research; Massachusetts Institute of Technology (MIT); Universidad Torcuato Di Tella
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjy022
• 发表日期: 2019
• 页码: 451-505
• 关键词: inflation; dispersion; facts

摘要

In this article, we analyze how inflation affects firms' price-setting behavior. For a class of menu cost models, we derive several predictions about how price-setting changes with inflation at very high and at near-zero inflation rates. Then, we present evidence supporting these predictions using product-level data underlying Argentina's consumer price index from 1988 to 1997-a unique experience where monthly inflation ranged from almost 200% to less than zero. For low inflation rates, we find that (i) the frequency and absolute size of price changes as well as the dispersion of relative prices do not change with inflation, (ii) the frequency and size of price increases and decreases are symmetric around zero inflation, and (iii) aggregate inflation changes are mostly driven by changes in the frequency of price increases and decreases, as opposed to the size of price changes. For high inflation rates, we find that (iv) the elasticity of the frequency of price changes with respect to inflation is close to two-thirds, (v) the frequency of price changes across different products becomes similar, and (vi) the elasticity of the dispersion of relative prices with respect to inflation is one-third. Our findings confirm and extend available evidence for countries that experienced either very high or near-zero inflation. We conclude by showing that a hyperinflation of 500% a year is associated with a cost of approximately 8.5% of aggregate output a year as a result of inefficient price dispersion alone. JEL Codes: E31, E50.