Advanced Search
MyIDEAS: Login

Heterogeneity in Sectoral Price Stickiness, Aggregate Dynamics and Monetary Policy Pitfalls with Real Shocks

Contents:

Author Info

  • Alessandro Flamini

    ()
    (Department of Economics and Management, University of Pavia)

Abstract

Ample differences in sectoral price stickiness is a widely documented fact. This paper shows that in presence of real shocks, heterogeneity in sectoral price stickiness plays a key role in the determination of the aggregate dynamics. The larger price stickiness heterogeneity, the smaller the persistence of inflation and the volatility of inflation, interest rate and output-gap. Thus, two economies with the same average degree of sectoral price stickiness but unlike variance may behave very differently. In terms of monetary policy, they can require interest rate paths that substantially differ both qualitatively and quantitatively. Generally, with real shocks, disregarding the dispersion in sectoral price stickiness leads policymakers to overvalue the variation and persistence of inflation and output gap.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://economia.unipv.it/docs/dipeco/quad/ps/RePEc/pav/demwpp/DEMWP0023.pdf
Download Restriction: no

Bibliographic Info

Paper provided by University of Pavia, Department of Economics and Management in its series DEM Working Papers Series with number 023.

as in new window
Length: 34 pages
Date of creation: Nov 2012
Date of revision:
Handle: RePEc:pav:demwpp:023

Contact details of provider:
Postal: Via S. Felice, 5 - 27100 Pavia
Phone: +39/0382/506208
Fax: +39/0382/304226
Web page: http://epmq.unipv.eu/site/home.html
More information through EDIRC

Related research

Keywords: Price Stickiness Heterogeneity; Real Shocks; New Keynesian model; Persistence; Volatility; Monetary Policy Mistakes;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Flamini, Alessandro & Ascari, Guido & Rossi, Lorenza, 2012. "Industrial Transformation, Heterogeneity in Price Stickiness, and the Great Moderation," Dynare Working Papers 24, CEPREMAP.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pav:demwpp:023. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alice Albonico).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.