Abstract
We assess the importance of nominal rigidities using a new weekly scanner dataset. We find that nominal rigidities take the form of inertia in reference prices and costs, defined as the most common prices and costs within a given quarter. Reference prices are particularly inertial and have an average duration of roughly one year, even though weekly prices change roughly once every two weeks. We document the relation between prices and costs and find sharp evidence of state dependence in prices. We use a simple model to argue that reference prices and costs are useful statistics for macroeconomic analysis.
Original language | English (US) |
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Pages (from-to) | 234-262 |
Number of pages | 29 |
Journal | American Economic Review |
Volume | 101 |
Issue number | 1 |
DOIs | |
State | Published - Feb 2011 |
ASJC Scopus subject areas
- Economics and Econometrics
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Dive into the research topics of 'Reference prices, costs, and nominal rigidities'. Together they form a unique fingerprint.Datasets
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Replication data for: Reference Prices, Costs, and Nominal Rigidities
Eichenbaum, M. (Creator), Jaimovich, N. (Creator) & Rebelo, S. (Creator), ICPSR - Interuniversity Consortium for Political and Social Research, 2011
DOI: 10.3886/e112396v1, https://www.openicpsr.org/openicpsr/project/112396/version/V1/view
Dataset