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Some evidence on factor intensity and price rigidity

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  • Peneva, Ekaterina

Abstract

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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  • Peneva, Ekaterina, 2011. "Some evidence on factor intensity and price rigidity," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1652-1658, October.
    • Handle: RePEc:eee:dyncon:v:35:y:2011:i:10:p:1652-1658
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    Cited by:

    1. Mohamed Diaby & Atsuyoshi Morozumi, 2019. "Sectoral heterogeneities in price rigidity and returns to scale," Discussion Papers 2019/05, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    2. Frank Smets & Joris Tielens & Jan Van Hove, 2018. "Pipeline Pressures and Sectoral Inflation Dynamics," Working Paper Research 351, National Bank of Belgium.
    3. Edward S. Knotek & Saeed Zaman, 2014. "On the Relationships between Wages, Prices, and Economic Activity," Economic Commentary, Federal Reserve Bank of Cleveland, issue Aug.
    4. Solórzano Diego & Dixon Huw, 2020. "The Relationship Between Nominal Wage and Price Flexibility: New Evidence," Working Papers 2020-20, Banco de México.
    5. Joris Tielens, 2019. "Pipeline Pressures and Sectoral Inflation Dynamics," 2019 Meeting Papers 856, Society for Economic Dynamics.

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    Keywords

    Price rigidity Factor intensity;

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