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  1. Nonlinear dynamics in menu cost economies?
    evidence from U.S. data
    Author: Blanco, Andrés; Boar, Corina; Jones, Callum; Midrigan, Virgiliu
    Published: 19 July 2024
    Publisher:  Centre for Economic Policy Research, London

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    Source: Staatsbibliothek zu Berlin
    Language: English
    Media type: Book
    Format: Online
    Series: Array ; DP19268
    Subjects: menu costs; inflation; fraction of price changes
    Scope: 1 Online-Ressource (circa 22 Seiten), Illustrationen
  2. Nonlinear dynamics in menu cost economies?
    evidence from U.S. data
    Author: Blanco, Andrés; Boar, Corina; Jones, Callum; Midrigan, Virgiliu
    Published: July 2024
    Publisher:  Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C.

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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Series: Finance and economics discussion series ; 2024, 076
    Subjects: menu costs; inflation; fraction of price changes
    Scope: 1 Online-Ressource (circa 25 Seiten), Illustrationen
  3. Deflation and relative prices
    evidence from Japan and Hong Kong
    Published: Aug. 2007
    Publisher:  WWZ, Basel

    We test the menu cost model of Ball and Mankiw (1994, 1995), which implies that the impact of price dispersion on inflation should differ between inflation and deflation episodes, using data for Japan and Hong Kong. We use a random crosssection... more

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    We test the menu cost model of Ball and Mankiw (1994, 1995), which implies that the impact of price dispersion on inflation should differ between inflation and deflation episodes, using data for Japan and Hong Kong. We use a random crosssection sample split when calculating the moments of the distribution of price changes to mitigate the small-cross-section-sample bias noted by Cecchetti and Bryan (1999). The parameter on the third moment is positive and significant in both countries during both the inflation and deflation periods, and the parameter on the second moment changes sign in the deflation period, as the theory predicts.

     
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    Source: Union catalogues
    Language: English
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    hdl: 10419/123372
    Series: WWZ working paper ; 07,08
    Subjects: Inflation; Deflation; Relativer Preis; Anpassungskosten; Schätzung; Hongkong; Japan; inflation; deflation; menu costs; Hong Kong; Japan
    Scope: Online-Ressource, 24 S., Text, graph. Darst.
  4. Do menu costs make prices sticky?
    Author: Eife, Thomas A.
    Published: October 2008
    Publisher:  University of Heidelberg, Department of Economics, Heidelberg

    This paper studies whether menu costs are large enough to explain why firms are so reluctant to change their prices. Without actually estimating menu costs, we can infer their relevance for firms' price setting decisions from observed pricing... more

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    This paper studies whether menu costs are large enough to explain why firms are so reluctant to change their prices. Without actually estimating menu costs, we can infer their relevance for firms' price setting decisions from observed pricing behavior around a currency changeover. At a currency changeover, firms have to reprint their price tags (menus) independently of whether or not they want to change prices. And if this is costly, firms' price setting behavior is altered in the months around the changeover. Using data from the Euro-changeover, the paper estimates that menu costs can explain a stickiness of around 30 days which is considerably less than the 7 to 24-month stickiness we observe in retailing and in the service sector. The reluctance of firms to adjust prices more frequently appears to be caused by factors other than menu costs.

     
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    Source: Union catalogues
    Language: English
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    hdl: 10419/127291
    Series: Discussion paper series / Universität Heidelberg, Department of Economics ; no. 477
    Subjects: Preisrigidität; Preismanagement; Anpassungskosten; Währungsumstellung; Euro; Deutschland; menu costs; price stickiness
    Scope: 1 Online-Ressource (circa 38 Seiten), Illustrationen
  5. The impact of price adjustment costs on price dispersion in E-commerce
    Author: Böheim, René; Hackl, Franz; Hölzl-Leitner, Michael
    Published: [2019]
    Publisher:  Department of Economics, Johannes Kepler University of Linz, Linz-Auhof, Austria

    We analyze price dispersion using panel data from a large price comparison site. We use past pricing behavior to instrument for potential endogeneity that might result from the selection of firms to certain product markets. We find that greater price... more

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    We analyze price dispersion using panel data from a large price comparison site. We use past pricing behavior to instrument for potential endogeneity that might result from the selection of firms to certain product markets. We find that greater price adjustment costs result in greater price dispersion. Although the impact of price adjustment costs on price dispersion became weaker over time, the causal effect of price adjustment costs on price dispersion is still present at the end of the period. Our results are robust to many alternative empirical specifications. We also test a range of alternative explanations of price dispersion, such as search cost, service differentiation, obfuscation, vertical restraints, and market structure.

     
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    Source: Union catalogues
    Language: English
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    hdl: 10419/207117
    Series: Working paper / Department of Economics, Johannes Kepler University of Linz ; no. 1904 (February 2019)
    Subjects: price dispersion; price adjustment costs; menu costs; e-commerce
    Scope: 1 Online-Ressource (circa 44 Seiten), Illustrationen
  6. The roles of price points and menu costs in price rigidity
    Author: Knotek, Edward S.
    Published: 2019
    Publisher:  Federal Reserve Bank of Cleveland, [Cleveland, OH]

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    Series: Working paper / Federal Reserve Bank of Cleveland ; 19, 23 (November 2019)
    Subjects: price rigidity; menu costs; price points; nine-ending prices
    Scope: 1 Online-Ressource (circa 53 Seiten), Illustrationen
  7. Persistent monetary non-neutrality in an estimated menu-cost model with partially costly information
    Author: Bonomo, Marco Antonio; Carvalho, Carlos Viana de; Garcia, René; Malta, Vivian; Rigato, Rodolfo
    Published: [2021]
    Publisher:  [Departamento de Economia, Pontifícia Universidade Católica do Rio de Janeiro], [Rio de Janeiro, RJ]

    We propose a model that reconciles microeconomic evidence of frequent and large price changes with sizable monetary non-neutrality. Firms incur separate lump-sum costs to change prices and to gather and process some information about marginal costs.... more

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    We propose a model that reconciles microeconomic evidence of frequent and large price changes with sizable monetary non-neutrality. Firms incur separate lump-sum costs to change prices and to gather and process some information about marginal costs. Additional relevant information is continuously available, and can be factored into pricing decisions at no cost. We estimate the model by Simulated Method of Moments, using price-setting statistics for the U.S. economy. The model with free idiosyncratic and costly aggregate information fits well both targeted and untargeted microeconomic moments and generates almost three times as much monetary non-neutrality as the Calvo model.

     
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    hdl: 10419/249736
    Series: Texto para discussão / PUC Rio, Departamento de Economia ; no. 688
    Subjects: menu costs; information costs; infrequent information; partial information; inattention; optimal price setting; state-dependent pricing; time-dependent pricing
    Scope: 1 Online-Ressource (circa 46 Seiten), Illustrationen
  8. Real rigidities, firm dynamics, and monetary nonneutrality
    the role of demand shocks
    Author: Aruoba, S. Borağan; Oue, Eugene; Saffie, Felipe; Willis, Jonathan L.
    Published: [2023]
    Publisher:  Federal Reserve Bank of Atlanta, Atlanta, GA

    We propose a parsimonious framework for real rigidities, in the form of strategic complementarities, that can generate real and nominal dynamics and match key features of the data across several literatures. Existing menu-cost models featuring... more

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    We propose a parsimonious framework for real rigidities, in the form of strategic complementarities, that can generate real and nominal dynamics and match key features of the data across several literatures. Existing menu-cost models featuring strategic complementarities require unrealistically volatile shocks to idiosyncratic productivity to be consistent with pricing moments. We develop a simple menu-cost model with strategic complementarities along with idiosyncratic productivity and demand shocks that are disciplined by the data. This approach allows us to overcome previous criticism from analysis of models that employ only an idiosyncratic productivity shock and calibrate solely using data from the price-adjustment literature. Despite its simplicity, the model can generate sizable monetary nonneutrality along with the magnitude of cost pass-through documented in previous studies, while also remaining consistent with micro pricing and markup evidence.

     
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    Source: Union catalogues
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    hdl: 10419/279458
    Series: Working paper series / Federal Reserve Bank of Atlanta ; 2023, 3 (April 2023)
    Subjects: menu costs; strategic complementarities; demand shocks; sticky prices; monetary nonneutrality
    Scope: 1 Online-Ressource (circa 43 Seiten), Illustrationen
  9. Does inflation come and go in the same way?
    Author: Hukkinen, Juhana; Virén, Matti E. E.
    Published: November 2023
    Publisher:  Aboa Centre for Economics, Turku

    The failure to predict the surge in inflation in 2021 raises questions about whether we are better equipped to anticipate a future decline in inflation. What tools do we intend to use for predicting the trajectory of inflation? Are we still primarily... more

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    The failure to predict the surge in inflation in 2021 raises questions about whether we are better equipped to anticipate a future decline in inflation. What tools do we intend to use for predicting the trajectory of inflation? Are we still primarily relying on survey data regarding inflation expectations, and are we still employing a Calvo-type structure to model inflation, in which only the intensive margin (the size of price increases) adjusts in response to changes in demand and supply? We would like to emphasize that our highly disaggregated consumer price data for the Euro area, consisting of 280 commodity categories, strongly suggests that price increases (inflation) are influenced not only by aggregate trends but also by sector-specific developments that result in state-dependent price adjustments. These factors may lead to more volatile fluctuations in the inflation rate. Furthermore, these reactions do not appear to be entirely symmetric when it comes to rising and falling inflation. When the inflation rate is close to zero, the role of state-dependent pricing is diminished, and nonlinearities become less significant.

     
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    hdl: 10419/298579
    Series: Discussion paper / Aboa Centre for Economics ; no. 163 (November 2023)
    Subjects: inflation; state-dependent pricing; menu costs
    Scope: 1 Online-Ressource (circa 17 Seiten), Illustrationen
  10. Non-linear inflation dynamics in menu cost economies
    Author: Blanco, Andrés; Boar, Corina; Jones, Callum; Midrigan, Virgiliu
    Published: January 2024
    Publisher:  Divisions of Research & Statistics and Monetary Affairs, Federal Reserve Board, Washington, D.C.

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    Series: Finance and economics discussion series ; 2024, 005
    Subjects: menu costs; inflation; Phillips curve
    Scope: 1 Online-Ressource (circa 69 Seiten), Illustrationen
  11. Nonlinear dynamics in menu cost economies?
    evidence from U.S. data
    Author: Blanco, Andrés; Boar, Corina; Jones, Callum; Midrigan, Virgiliu
    Published: [2024]
    Publisher:  Federal Reserve Bank of Atlanta, Atlanta, GA

    We show that standard menu cost models cannot simultaneously reproduce the dispersion in the size of micro-price changes and the extent to which the fraction of price changes increases with inflation in the U.S. time-series. Though the Golosov and... more

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    We show that standard menu cost models cannot simultaneously reproduce the dispersion in the size of micro-price changes and the extent to which the fraction of price changes increases with inflation in the U.S. time-series. Though the Golosov and Lucas (2007) model generates fluctuations in the fraction of price changes, it predicts too little dispersion in the size of price changes and therefore little monetary nonneutrality. In contrast, versions of the model that reproduce the dispersion in the size of price changes and generate stronger monetary nonneutrality predict a nearly constant fraction of price changes.

     
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    Series: Working paper series / Federal Reserve Bank of Atlanta ; 2024, 11 (September 2024)
    Subjects: menu costs; inflation; fraction of price changes
    Scope: 1 Online-Ressource (circa 19 Seiten), Illustrationen
  12. Nonlinear inflation dynamics in menu cost economies
    Author: Blanco, Andrés; Boar, Corina; Jones, Callum; Midrigan, Virgiliu
    Published: [2024]
    Publisher:  Federal Reserve Bank of Atlanta, Atlanta, GA

    Existing menu cost models, when parameterized to match the micro-price data, cannot reproduce the extent to which the fraction of price changes increases with inflation. In addition, in the presence of strategic complementarities, they predict... more

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    Existing menu cost models, when parameterized to match the micro-price data, cannot reproduce the extent to which the fraction of price changes increases with inflation. In addition, in the presence of strategic complementarities, they predict implausibly large menu costs and misallocation. We resolve these shortcomings using a multi-product menu cost model that features two key ingredients. First, the products sold by a firm are imperfect substitutes. Second, strategic complementarities are at the firm level, not the product level. In contrast to existing models, the fraction of price changes increases rapidly with the size of monetary shocks, so our model implies a nonlinear Phillips curve.

     
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    Series: Working paper series / Federal Reserve Bank of Atlanta ; 2024, 10 (September 2024)
    Subjects: menu costs; inflation; Phillips curve
    Scope: 1 Online-Ressource (circa 71 Seiten), Illustrationen
  13. Competition and innovation in a technology setting software duopoly
    Author: Bitzer, Jürgen; Schröder, Philipp J. H.
    Published: 2003
    Publisher:  DIW, Berlin

  14. Nonlinear dynamics in menu cost economies?
    evidence from U.S. data
    Author: Blanco, Andrés; Boar, Corina; Jones, Callum; Midrigan, Virgiliu
    Published: 19 July 2024
    Publisher:  Centre for Economic Policy Research, London

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    Universität Potsdam, Universitätsbibliothek
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    Source: Staatsbibliothek zu Berlin
    Language: English
    Media type: Book
    Format: Online
    Series: Array ; DP19268
    Subjects: menu costs; inflation; fraction of price changes
    Scope: 1 Online-Ressource (circa 22 Seiten), Illustrationen
  15. The impact of price adjustment costs on price dispersion in e-commerce
    Author: Böheim, René; Hackl, Franz; Hölzl-Leitner, Michael
    Published: [2019]
    Publisher:  CESifo, Center for Economic Studies & Ifo Institute, Munich, Germany

    We analyze price dispersion using panel data from a large price comparison site. We use past pricing behavior to instrument for potential endogeneity that might result from the selection of firms to certain product markets. We find that greater price... more

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    Staats- und Universitätsbibliothek Bremen
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    We analyze price dispersion using panel data from a large price comparison site. We use past pricing behavior to instrument for potential endogeneity that might result from the selection of firms to certain product markets. We find that greater price adjustment costs result in greater price dispersion. Although the impact of price adjustment costs on price dispersion became weaker over time, the causal effect of price adjustment costs on price dispersion is still present at the end of the period. Our results are robust to many alternative empirical specifications. We also test a range of alternative explanations of price dispersion, such as search cost, service differentiation, obfuscation, vertical restraints, and market structure.

     
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    Source: Union catalogues
    Language: English
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    Format: Online
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    hdl: 10419/198870
    Series: Array ; no. 7510 (February 2019)
    Subjects: price dispersion; price adjustment costs; menu costs; e-commerce
    Scope: 1 Online-Ressource (circa 45 Seiten), Illustrationen
  16. The impact of price adjustment costs on price dispersion in E-commerce
    Author: Böheim, René; Hackl, Franz; Hölzl-Leitner, Michael
    Published: February 2019
    Publisher:  Vienna University of Economics and Business, Wien

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    Series: Department of Economics working paper / Vienna University of Economics and Business ; no. 280 (March 2019)
    Subjects: price dispersion; price adjustment costs; menu costs; e-commerce
    Scope: 1 Online-Ressource (circa 44 Seiten), Illustrationen
  17. Price flexibility in British supermarkets
    moderation and recession
    Author: Dixon, Huw; Seaton, Jonathan S.; Waterson, Michael
    Published: 2014
    Publisher:  Univ. of Warwick, Dep. of Economics, Coventry

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    Series: Warwick economic research papers ; 1041
    Subjects: Micro pricing; price flexibility; regular prices; menu costs
    Scope: Online-Ressource (68 S.), graph. Darst.
  18. Deflation and relative prices
    evidence from Japan and Hong Kong
    Author: Gerlach, Stefan; Kugler, Peter
    Published: 2007
    Publisher:  Johann Wolfgang Goethe-Univ., Frankfurt am Main

    We test the menu cost model of Ball and Mankiw (1994, 1995), which implies that the impact of price dispersion on inflation should differ between inflation and deflation episodes, using data for Japan and Hong Kong. We use a random cross-section... more

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    We test the menu cost model of Ball and Mankiw (1994, 1995), which implies that the impact of price dispersion on inflation should differ between inflation and deflation episodes, using data for Japan and Hong Kong. We use a random cross-section sample split when calculating the moments of the distribution of price changes to mitigate the small-cross-sectionsample bias noted by Cecchetti and Bryan (1999). The parameter on the third moment is positive and significant in both countries during both the inflation and deflation periods, and the parameter on the second moment changes sign in the deflation period, as the theory predicts. Keywords: inflation, deflation, menu costs, Hong Kong, Japan.

     
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    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/97771
    Series: Working paper series / Institute for Monetary and Financial Stability ; 12
    Subjects: inflation; deflation; menu costs; Hong Kong; Japan
    Scope: Online-Resource (25 S.), graph. Darst.
  19. Strategic complementarities and nominal rigidities
    Author: König, Philipp Johann; Meyer-Gohde, Alexander
    Published: 2014
    Publisher:  SFB 649, Economic Risk, Berlin

    We reconsider the canonical model of price setting with menu costs by Ball and Romer (1990). Their original model exhibits multiple equilibria for nominal aggregate demand shocks of intermediate size. By abandoning Ball and Romer's (1990) assumption... more

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    We reconsider the canonical model of price setting with menu costs by Ball and Romer (1990). Their original model exhibits multiple equilibria for nominal aggregate demand shocks of intermediate size. By abandoning Ball and Romer's (1990) assumption that demand shocks are common knowledge among price setters, we derive a unique symmetric threshold equilibrium where agents adjust prices whenever the demand shock falls outside the thresholds. The comparative statics of this threshold may differ from the one that gives rise to maximal nominal rigidity examined by Ball and Romer (1990). In contrast to their analysis, we find that a decrease in real rigidities can be associated with an increase in nominal rigidities due to the endogenous adjustment of agents' beliefs regarding the aggregate price level.

     
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    hdl: 10419/103799
    Series: SFB 649 discussion paper ; 2014-054
    Subjects: menu costs; global games
    Scope: Online-Ressource (25 S.), graph. Darst.
  20. On the output-inflation relationship when price and quantity adjustments are costly
    Author: Danziger, Leif; Kreiner, Claus Thustrup
    Published: 2000
    Publisher:  CESifo, München

    A vast literature analyzes the real effects of price-adjustment costs assuming that quantity adjustments are costless. In this paper, we analyze whether the presence of quantity-adjustments costs, which presumably are significant, change the... more

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    A vast literature analyzes the real effects of price-adjustment costs assuming that quantity adjustments are costless. In this paper, we analyze whether the presence of quantity-adjustments costs, which presumably are significant, change the traditional results on the impact of inflation. In particular, recent findings suggest that quantity-adjustment costs may remove the linkage between output and inflation. We show that this is not the case when inflation is anticipated. On the contrary, quantity-adjustment costs may significantly amplify the consequences of price-adjustment costs.

     
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    hdl: 10419/75682
    Series: CESifo Working Paper ; 293
    Subjects: output-inflation relationship; menu costs; quantity-adjustment costs
    Scope: Online-Ressource (12 S.)