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Displaying results 1 to 4 of 4.

  1. Price trends over the product life cycle and the optimal inflation target
    Author: Adam, Klaus; Weber, Henning
    Published: [2019]
    Publisher:  CESifo, Center for Economic Studies & Ifo Institute, Munich, Germany

    We document a new stylized fact for the life-cycle behavior of consumer prices: relative to a narrowly defined set of competing products, the price of individual products tends to fall over the product lifetime. This holds true for more than 90% of... more

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    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 63
    Inter-library loan:
    No inter-library loan

     

    We document a new stylized fact for the life-cycle behavior of consumer prices: relative to a narrowly defined set of competing products, the price of individual products tends to fall over the product lifetime. This holds true for more than 90% of the expenditure items underlying the U.K. consumer price index and has important normative implications. Constructing a sticky price model featuring a product life cycle and rich amounts of heterogeneity, we explain how the optimal inflation target can be estimated from the observed trends in relative prices. The optimal inflation target for the U.K. is found to range between 2.6% and 3.2% and to have steadily increased over the period 1996 to 2016. We show how changes in relative price trends contributed to this development.

     
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Other identifier:
    hdl: 10419/207280
    Series: Array ; no. 7889 (October 2019)
    Subjects: optimal inflation rate; product life cycle; U.K. micro price data
    Scope: 1 Online-Ressource (circa 77 Seiten), Illustrationen
  2. Optimal trend inflation
    Author: Adam, Klaus; Weber, Henning
    Published: July 2018
    Publisher:  Institute for Monetary and Economic Studies, Bank of Japan, Tokyo, Japan

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    Verlag (kostenfrei)

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    VS 873
    Inter-library loan:
    No inter-library loan
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    Source: Union catalogues
    Language: English
    Media type: Book
    Format: Online
    Series: Array ; no. 2018, E-7
    Subjects: optimal inflation rate; sticky prices; firm heterogeneit
    Scope: 1 Online-Ressource (circa 66 Seiten), Illustrationen
  3. Optimal trend inflation, misallocation and the pass-through of labour costs to prices
    Author: Santoro, Sergio; Viviano, Eliana
    Published: [2022]
    Publisher:  European Central Bank, Frankfurt am Main, Germany

    We show that a sticky price model featuring firms' heterogeneity in terms of productivity and strategic complementarities in price setting delivers a strictly positive optimal inflation in steady state, differently from standard New Keynesian models.... more

    Access:
    Verlag (kostenfrei)
    Resolving-System (kostenfrei)
    Resolving-System (kostenfrei)

    Location:
    ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
    Signature:
    DS 534
    Inter-library loan:
    No inter-library loan

     

    We show that a sticky price model featuring firms' heterogeneity in terms of productivity and strategic complementarities in price setting delivers a strictly positive optimal inflation in steady state, differently from standard New Keynesian models. Due to strategic complementarities, more productive firms have higher markups in steady state. This leads to a misallocation distortion, as more productive firms produce too little compared to the social optimum. An increase of steady state inflation curbs the markups, especially those of the more productive firms, hence attenuating the inefficient dispersion of markups. At low levels of inflation, the gains from the reduction in misallocation outweigh the cost of inflation. Heterogeneity in productivity and strategic complementarities in price setting, the key ingredients of our model, imply that also firms' response to shocks is heterogenous: less productive firms transmit cost shocks to prices much more than more productive ones. To provide empirical support to our key mechanism we resort to a quasi-natural experiment occurred in Italy in late 2014, when a cut to social security contributions for all new open-ended contracts was announced. Consistently with our theory, we show that the pass-through of this shock to labour costs was much stronger for less productive firms.

     
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    Source: Union catalogues
    Language: English
    Media type: Ebook
    Format: Online
    ISBN: 9789289954730
    Other identifier:
    hdl: 10419/278286
    Series: Working paper series / European Central Bank ; no 2761 (December 2022)
    Subjects: optimal inflation rate; price pass-through; labour costs; firm heterogeneity
    Scope: 1 Online-Ressource (circa 46 Seiten), Illustrationen
  4. Optimal trend inflation
    Author: Adam, Klaus; Weber, Henning
    Published: 2017
    Publisher:  Universitätsbibliothek Johann Christian Senckenberg, Frankfurt am Main

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