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On Endogenously Staggered Prices

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Author Info
Bhaskar, V

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Abstract

Taylor's model of staggered contracts is an influential explanation for nominal inertia and the persistent real effects of nominal shocks. However, in standard imperfect competition models, if agents are allowed to choose the timing of pricing decisions, they will typically choose to synchronize. This paper provides a simple model of imperfect competition which produces stable staggering. Our argument relies on strategic interaction at two levels--between firms within an industries, and across industries--and produces a continuum of staggered price equilibria. These equilibria are strict, and hence stable under a simple adaptive learning process. Copyright 2002 by The Review of Economic Studies Limited

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Publisher Info
Article provided by Blackwell Publishing in its journal Review of Economic Studies.

Volume (Year): 69 (2002)
Issue (Month): 1 (January)
Pages: 97-116
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Handle: RePEc:bla:restud:v:69:y:2002:i:1:p:97-116

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Louis Phaneuf, 1990. "Wage Contracts and the Unit Root Hypothesis," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 580-92, August. [Downloadable!] (restricted)
  2. Blanchard, Olivier J, 1986. "The Wage Price Spiral," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 543-65, August. [Downloadable!] (restricted)
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  3. Taylor, John B, 1979. "Staggered Wage Setting in a Macro Model," American Economic Review, American Economic Association, vol. 69(2), pages 108-13, May. [Downloadable!] (restricted)
  4. Laurence Ball & David Romer, 1989. "The Equilibrium and Optimal Timing of Price Changes," NBER Working Papers 2412, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Domberger, Simon & Fiebig, Denzil G, 1993. "The Distribution of Price Changes in Oligopoly," Journal of Industrial Economics, Blackwell Publishing, vol. 41(3), pages 295-313, September. [Downloadable!] (restricted)
  6. Ball, Laurence & Cecchetti, Stephen G, 1988. "Imperfect Information and Staggered Price Setting," American Economic Review, American Economic Association, vol. 78(5), pages 999-1018, December. [Downloadable!] (restricted)
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  7. Caplin, Andrew S & Spulber, Daniel F, 1987. "Menu Costs and the Neutrality of Money," The Quarterly Journal of Economics, MIT Press, vol. 102(4), pages 703-25, November. [Downloadable!] (restricted)
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  8. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February. [Downloadable!] (restricted)
  9. V. V. Chari & Patrick J. Kehoe & Ellen R. McGrattan, 1996. "Sticky Price Models of the Business Cycle: Can the Contract Multiplier Solve the Persistence Problem?," NBER Working Papers 5809, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Lach, Saul & Tsiddon, Daniel, 1992. "The Behavior of Prices and Inflation: An Empirical Analysis of Disaggregated Price Data," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 349-89, April. [Downloadable!] (restricted)
  11. Caminal, R., 1988. "Inflation And Optimal Price Adjustment Under Monopolistic Competition," UFAE and IAE Working Papers 90.88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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  12. Matsukawa, Shigeru, 1986. "The Equilibrium Distribution of Wage Settlements and Economic Stability," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(2), pages 415-37, June. [Downloadable!] (restricted)
  13. Tsiddon, Daniel, 1993. "The (Mis)Behaviour of the Aggregate Price Level," Review of Economic Studies, Blackwell Publishing, vol. 60(4), pages 889-902, October. [Downloadable!] (restricted)
  14. Parkin, Michael, 1986. "The Output-Inflation Trade-off When Prices Are Costly to Change," Journal of Political Economy, University of Chicago Press, vol. 94(1), pages 200-224, February. [Downloadable!] (restricted)
  15. Olivier J. Blanchard, 1982. "Price Asynchronization and Price Level Inertia," NBER Working Papers 0900, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. De Fraja, Giovanni, 1993. "Staggered vs. synchronised wage setting in oligopoly," European Economic Review, Elsevier, vol. 37(8), pages 1507-1522, December. [Downloadable!] (restricted)
  17. Eric Maskin & Jean Tirole, 1985. "A Theory of Dynamic Oligopoly, II: Price Competition," Working papers 373, Massachusetts Institute of Technology (MIT), Department of Economics.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. V. Bhaskar, 2002. "Asymmetric Price Adjustment: Micro-foundations and Macroeconomic Implications," Economics Discussion Papers 547, University of Essex, Department of Economics. [Downloadable!]
  2. Emmanuel Dhyne & Jerzy Konieczny, 2007. "Temporal Distribution of Price Changes : Staggering in the Large and Synchronization in the Small," Research series 200706-02, National Bank of Belgium. [Downloadable!]
    Other versions:
  3. Loy, Jens-Peter & Weiss, Christoph R., 2002. "Staggering And Synchronization Of Prices In A Low Inflation Environment: Evidence From German Food Stores," 2002 Annual meeting, July 28-31, Long Beach, CA 19882, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  4. Marco G. Ercolani and Jayasri Dutta, 2006. "The Euro-changeoverand Euro-inflation: Evidence from Eurostat's HICP," Discussion Papers 06-03, Department of Economics, University of Birmingham. [Downloadable!]
  5. Loy, J.P. & Weiss, C.R., 2002. "Staggering and Synchronisation of Prices in a Low Inflation Environment: Evidence from German Food Stores," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24823, European Association of Agricultural Economists. [Downloadable!]
  6. Laura Veldkamp & Christian Hellwig, 2006. "Knowing What Others Know: Coordination Motives in Information Acquisition," Working Papers 06-14, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
    Other versions:
  7. D. Cornille & M. Dossche, 2006. "The Patterns and Determinants of Price Setting in the Belgian Industry," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 06/386, Ghent University, Faculty of Economics and Business Administration. [Downloadable!]
    Other versions:
  8. Richard Mash, 2003. "New Keynesian Microfoundations Revisited: A Calvo-Taylor-Rule-of-Thumb Model and Optimal Monetary Policy Delegation," Economics Series Working Papers 174, University of Oxford, Department of Economics. [Downloadable!]
  9. Makoto Watanabe, 2006. "Inflation, Price Competition and Consumer Search Technology," Economics Working Papers we065623, Universidad Carlos III, Departamento de Economía. [Downloadable!]
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  10. Christian Hellwig, 2005. "Knowing What Others Know: Coordination Motives in Information Acquisition (March 2007, with Laura Veldkamp)," UCLA Economics Online Papers 369, UCLA Department of Economics. [Downloadable!]
  11. Richard Mash, 2002. "New Keynesian Microfundations Revisited: A Generalised Calvo-Taylor Model and the Desirability of Inflation vs. Price Level Targeting," Economics Series Working Papers 109, University of Oxford, Department of Economics. [Downloadable!]
    Other versions:
  12. Jan Libich, 2006. "An Explicit Inflation Target As A Commitment Device," CAMA Working Papers 2006-22, Australian National University, Centre for Applied Macroeconomic Analysis. [Downloadable!]
    Other versions:
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