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Some evidence on factor intensity and price rigidity

  • Peneva, Ekaterina
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    This paper establishes a new empirical finding: the degree of labor intensity and the degree of price flexibility are negatively correlated across industrial sectors in the U.S. economy. This finding suggests that varying factor intensity can potentially generate different degrees of price stickiness across sectors and remove the need to exogenously impose the latter. Of course, labor intensity is just one more feature--in addition to others like the durability of goods produced and the degree of competition--that can explain some of the heterogeneity in price durations across sectors.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165188911000704
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    Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

    Volume (Year): 35 (2011)
    Issue (Month): 10 (October)
    Pages: 1652-1658

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    Handle: RePEc:eee:dyncon:v:35:y:2011:i:10:p:1652-1658
    Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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    7. BOUAKEZ, Hafedh & CARDIA, Emanuela & RUGE-MURCIA, Francisco J., 2009. "Sectoral Price Rigidity and Aggregate Dynamics," Cahiers de recherche 01-2009, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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    18. Mark Bils & Peter J. Klenow & Oleksiy Kryvtsov, 2003. "Sticky prices and monetary policy shocks," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Win, pages 2-9.
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