A note on measuring the importance of the uniform nonsynchronization hypothesis
In this note we reappraise the measure of the importance of time-dependent price setting rules suggested by Klenow and Kryvtsov (2005, "State-Dependent or Time-Dependent Pricing: Does It Matter for Recent U.S. Inflation?," Bank of Canada Working Paper 05-4). Furthermore, we propose an alternative way to gauge the significance of this type of price setting behavior, which can be interpreted as an upper bound for the proportion of price trajectories which are compatible with the uniform nonsynchronization hypothesis. The merits of the proposed measure are highlighted in an application using micro-data. Our results suggest that a large proportion of price trajectories may be compatible with simple time-dependent price setting mechanisms, but the strength of this evidence very much depends on the way that is used to evaluate the importance of this type of behavior.
Volume (Year): 4 (2007)
Issue (Month): 6 ()
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- Oleksiy Kryvtsov & Peter J. Klenow, 2004.
"State-Dependent or Time-Dependent Pricing: Does It Matter For Recent U.S. Inflation?,"
Computing in Economics and Finance 2004
277, Society for Computational Economics.
- Peter J. Klenow & Oleksiy Kryvtsov, 2008. "State-Dependent or Time-Dependent Pricing: Does it Matter for Recent U.S. Inflation?," The Quarterly Journal of Economics, Oxford University Press, vol. 123(3), pages 863-904.
- Peter J. Klenow & Oleksiy Kryvtsov, 2005. "State-Dependent or Time-Dependent Pricing: Does It Matter for Recent U.S. Inflation?," Staff Working Papers 05-4, Bank of Canada.
- Peter J. Klenow & Oleksiy Kryvtsov, 2007. "State-Dependent or Time-Dependent Pricing: Does It Matter for Recent U.S. Inflation?," Discussion Papers 07-007, Stanford Institute for Economic Policy Research.
- Peter J. Klenow & Oleksiy Kryvtsov, 2005. "State-Dependent or Time-Dependent Pricing: Does it Matter for Recent U.S. Inflation?," NBER Working Papers 11043, National Bureau of Economic Research, Inc.
- Daniel Dias & Carlos Robalo Marques & J.M.C.Santos Silva, 2006.
"Measuring the Importance of the Uniform Nonsynchronization Hypothesis,"
w200603, Banco de Portugal, Economics and Research Department.
- Dias, Daniel & Robalo Marques, Carlos & Santos Silva, João M. C., 2006. "Measuring the importance of the uniform nonsynchronization hypothesis," Working Paper Series 0606, European Central Bank.
- Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
- Taylor, John B, 1980.
"Aggregate Dynamics and Staggered Contracts,"
Journal of Political Economy,
University of Chicago Press, vol. 88(1), pages 1-23, February.
- Stephen G. Cecchetti, 1985. "Staggered Contracts and the Frequency of Price Adjustment," The Quarterly Journal of Economics, Oxford University Press, vol. 100(Supplemen), pages 935-959.
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