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Disaggregate Evidence On Price Stickiness And Implications For Macro Models

  • CARL R. GWIN
  • DAVID D. VAN HOOSE

"We use the methodology applied at the aggregate level by Gali and Gertler (1999) to analyze price and cost data for U.S. six-digit North American Industry Classification System (NAICS) industries. Industries with price adjustment periods of at least 6 quarters generate no more than about 43% of total sales of industries we analyze. Industries with estimated price adjustment speeds of less than a year generate at least 44% of sales. Our conclusion is that disaggregate U.S. data provide as much support in favor of relatively high price flexibility as they do for the assumption of widespread price stickiness utilized in many modern macroeconomic theories. "("JEL "E31, L16) Copyright (c) 2007 Western Economic Association International.

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Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 46 (2008)
Issue (Month): 4 (October)
Pages: 561-575

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Handle: RePEc:bla:ecinqu:v:46:y:2008:i:4:p:561-575
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