Title: Firm-specific capital, nominal rigidities, and the business cycle
Description: "Macroeconomic and microeconomic data paint conflicting pictures of price behavior.  Macroeconomic data suggest that inflation is inertial.  Microeconomic data indicate that firms change prices frequently.  We formulate and estimate a model which resolves this apparent micro--macro conflict.  Our model is consistent with post-war U.S.  evidence on inflation inertia even though firms re-optimize prices on average once every 1.5 quarters.  The key feature of our model is that capital is firm-specific and pre-determined within a period"--National Bureau of Economic Research web site.
Subjects: Prices, Econometric models, Business cycles
Places: United States