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On implications of micro price data for macro models

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  • Smets, Frank
  • Maćkowiak, Bartosz

Abstract

We review the recent literature that studies new, detailed micro data on prices. We discuss implications of the new micro data for macro models. We argue that the new micro data are helpful for macro models, but not decisive. There is no simple mapping from the frequency of price changes in micro data to impulse responses of prices and quantities to shocks. We discuss ideas that promise to deliver macro models matching the impulse responses seen in macro data while being broadly in line with micro data. JEL Classification: E3, E5

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  • Smets, Frank & Maćkowiak, Bartosz, 2008. "On implications of micro price data for macro models," Working Paper Series 960, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:2008960
    Note: 58657
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    More about this item

    Keywords

    micro price data; models of price setting; real effects of nominal shocks; sticky prices;
    All these keywords.

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit

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