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Inventories, Markups, and Real Rigidities in Menu Cost Models

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  • Virgiliu Midrigan

    (New York University)

  • Oleksiy Kryvtsov

    (Bank of Canada)

Abstract

We examine the general equilibrium implications of an Aguirregabiria (1999) - type economy, in which firms are subject to fixed cost of price- and inventory-adjustment that is capable of generating infrequent orders and price changes observed in the data. We ask whether the model can account for patterns of temporal price variation, frequency of stockouts, etc. in the micro data and study the response of real activity to monetary disturbances in an otherwise standard (S,s) setup.

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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2008 Meeting Papers with number 487.

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Date of creation: 2008
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Handle: RePEc:red:sed008:487

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References

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  33. Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, MIT Press, vol. 123(4), pages 1415-1464, November.
  34. Khan, Aubhik & Thomas, Julia K., 2007. "EXPLAINING INVENTORIES: A BUSINESS CYCLE ASSESSMENT OF THE STOCKOUT AVOIDANCE AND (S,s) MOTIVES," Macroeconomic Dynamics, Cambridge University Press, vol. 11(05), pages 638-664, November.
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