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Pricing behavior and the comovement of productivity and labor: evidence from firm-level data

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  • Domenico J. Marchetti

    ()
    (Banca d'Italia)

  • Francesco Nucci

    ()
    (Universita' di Roma La Sapienza)

Abstract

Recent contributions have suggested that technology shocks have a negative short-run effect on labor input, contrary to the predictions of standard flexible-price models of the business cycle. Some authors have interpreted this finding as evidence in favor of stickyprice models, while others have either augmented flexible-price models in a number of ways or disputed the empirical finding itself. In this paper we estimate a number of alternative measures of TFP growth for a representative sample of Italian manufacturing firms and find a negative impact of productivity shocks on labor input. Furthermore, by relying on the firmlevel reported frequency of price reviews, we find that the contractionary effect is strong for firms with stickier prices, but it is weaker or not significant for firms with more flexible prices, consistently with the prediction of sticky-price models.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 524.

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Date of creation: Dec 2004
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Handle: RePEc:bdi:wptemi:td_524_04

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Web page: http://www.bancaditalia.it
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Related research

Keywords: Productivity shocks; Labor input; price stickiness;

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References

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  1. Claudio Michelacci & David Lopez-Salido, 2007. "Technology Shocks and Job Flows," Review of Economic Studies, Oxford University Press, vol. 74(4), pages 1195-1227.
  2. Jordi Galí & Pau Rabanal, 2004. "Technology Shocks and Aggregate Fluctuations," IMF Working Papers 04/234, International Monetary Fund.
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Cited by:
  1. Silvia Fabiani & Angela Gattulli & Roberto Sabbatini, 2004. "The pricing behaviour of Italian firms: new survey evidence on price stickiness," Temi di discussione (Economic working papers) 515, Bank of Italy, Economic Research and International Relations Area.
  2. Francesco Daveri & Cecilia Jona-Lasinio, 2005. "Italy's Decline: Getting the Facts Right," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(4), pages 365-410, December.
  3. Gaiotti, Eugenio, 2013. "Credit availability and investment: Lessons from the “great recession”," European Economic Review, Elsevier, vol. 59(C), pages 212-227.
  4. Eugenio Gaiotti & Alessandro Secchi, 2004. "Is there a cost channel of monetary policy transmission? An investigation into the pricing behaviour of 2,000 firms," Temi di discussione (Economic working papers) 525, Bank of Italy, Economic Research and International Relations Area.
  5. Annalisa Cristini & Dario Pozzoli, 2010. "Workplace practices and firm performance in manufacturing: A comparative study of Italy and Britain," International Journal of Manpower, Emerald Group Publishing, vol. 31(7), pages 818-842, November.

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