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A State-Dependent Model of Intermediate Goods Pricing

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  • Brent Neiman

    ()
    (University of Chicago - Booth School of Business)

Abstract

Recent analyses of transaction-level datasets have generated new stylized facts on price setting and greatly influenced the empirical macroeconomics literature. This work has uncovered marked heterogeneity in price stickiness, demonstrated that even non-zero price changes do not fully "pass through" cost shocks, and offered evidence of synchronization in the timing of price changes. Further, intrafirm prices have been shown to differ from arm's length prices in each of these characteristics. This paper develops a state-dependent model of intermediate goods pricing, which allows for arm's length and intrafirm transactions, and is capable of generating these empirical pricing patterns.

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File URL: http://bfi.uchicago.edu/RePEc/bfi/wpaper/BFI_2010-006.pdf
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Bibliographic Info

Paper provided by Becker Friedman Institute for Research In Economics in its series Working Papers with number 2010-006.

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Date of creation: Dec 2009
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Handle: RePEc:bfi:wpaper:2010-006

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Cited by:
  1. Lewis, Logan T., 2014. "Menu Costs, Trade Flows, and Exchange Rate Volatility," International Finance Discussion Papers 1102, Board of Governors of the Federal Reserve System (U.S.).
  2. Alberto Cavallo & Brent Neiman & Roberto Rigobon, 2012. "Currency Unions, Product Introductions, and the Real Exchange Rate," NBER Working Papers 18563, National Bureau of Economic Research, Inc.
  3. Neiman, Brent, 2010. "Stickiness, synchronization, and passthrough in intrafirm trade prices," Journal of Monetary Economics, Elsevier, vol. 57(3), pages 295-308, April.

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