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(S,s) pricing: Does the heterogeneity wipe out the asymmetry on micro level?

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  • Babutsidze, Zakaria
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    Abstract

    This paper presents a model of asymmetric (S,s) pricing. We investigate whether the asymmetry on micro level is carried over on macro level and what is the role of agent heterogeneity in the process. We look at two kinds of asymmetries: (i) asymmetric output responses monetary shocks and (ii) asymmetric responses to shocks during different phases of business cycle. We conclude that the first type of asymmetry can be attributed to the differences in adjustment bands and that heterogeneity softens this effect. The second type of asymmetry is the result of pricing behavior, thus of agent heterogeneity itself. --

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    Bibliographic Info

    Paper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2010-19.

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    Date of creation: 2010
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    Handle: RePEc:zbw:ifwedp:201019

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    Keywords: (S; s) pricing; heterogeneity; asymmetry; four-state shocks;

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