Menu costs and Phillips curves
By: Mikhail Golosov, Robert E. Lucas.
Contributors: Lucas, Robert E.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10187; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10187.
Publisher: National Bureau of Economic Research
Published: 2003
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Econometric models.; Phillips curve.
Description: "This paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation.  Sellers can change price only by incurring a real menu cost.' We calibrate this cost and the variance and autocorrelation of the idiosyncratic shock using a new U.S.  data set of individual prices due to Klenow and Kryvtsov.  The prediction of the calibrated model for the effects of high inflation on the frequency of price changes accords well with the Israeli evidence obtained by Lach and Tsiddon.  The model is also used to conduct numerical experiments on the economy's response to credible and incredible disinflations and other shocks.  In none of the simulations we conducted did monetary shocks induce large or persistent real responses"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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