Optimal Price Setting With Observation and Menu Costs

• 成果类型: Article
• 署名作者: Alvarez, Fernando E.; Lippi, Francesco; Paciello, Luigi
• 署名单位: University of Chicago; National Bureau of Economic Research; University of Sassari
• 刊物名称: QUARTERLY JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0033-5533
• DOI: 10.1093/qje/qjr043
• 发表日期: 2011
• 页码: 1909-1960
• 关键词: sticky information; inflation; DYNAMICS

摘要

We study the price-setting problem of a firm in the presence of both observation and menu costs. The firm optimally decides when to review costly information on the adequacy of its price. Upon each review, the firm chooses whether to adjust its price, one or more times, before the next price review. Each price adjustment entails paying a menu cost. The firm's choices map into several statistics: the frequency of price reviews, the frequency of price adjustments, the size distribution of price changes, and the hazard rate of price adjustments. The simultaneous presence of observation and menu costs produces complementarities that change the predictions of simpler models featuring one cost only. For instance, infrequent observations may reflect a high menu cost rather than high observation costs: in spite of these complementarities, we show that the ratio of the two costs is identified by several statistics on price observations and adjustments.