Aggregate Dynamics with Heterogeneous Agents and State-Dependent Pricing
Abstract
This paper examines the consequences of (S,s) pricing rules in a dynamic economy with heterogeneous costs of price adjustment. We construct the stationary distributions for aggregate output and prices for our model economy. As a result of our assumption of heterogeneous costs we find that: (i) Some sectors change prices more regularly than others; (ii) Price changes are asynchronized (relative prices may be moving in opposite directions in different sectors); (iii) The economy may be more sensitive to demand shocks. There is broad empirical support for the predictions of the model.Download Info
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Paper provided by Centre for Dynamic Macroeconomic Analysis in its series CDMA Working Paper Series with number 0505.Length:
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:san:cdmawp:0505
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Keywords: Price rigidity; (Ss) pricing; macroeconomic dynamics.;Find related papers by JEL classification:
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-06-14 (All new papers)
- NEP-MAC-2005-06-14 (Macroeconomics)
References
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- James Costain & Antón Nákov, 2009.
"Dynamics of the price distribution in a general model of state-dependent pricing,"
Banco de España Working Papers
0831, Banco de España.
- Anton Nakov & James Costain, 2009. "Dynamics of the Price Distribution in a General Model of State-Dependent Pricing," 2009 Meeting Papers 611, Society for Economic Dynamics.
- Vladislav Damjanovic & Charles Nolan, 2006.
"Aggregation and Optimization with State-Dependent Pricing: A Comment,"
Econometrica,
Econometric Society, vol. 74(2), pages 565-573, 03.
- Vladislav Damjanovic & Charles Nolan, 2005. " Aggregation and Optimization with State-Dependent Pricing: A Comment," CDMA Working Paper Series 0506, Centre for Dynamic Macroeconomic Analysis.
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