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Nonuniform Staggered Prices and Output Persistence

  • JOHAN SÖDERBERG

Staggered prices are a fundamental building block of New Keynesian dynamic stochastic general equilibrium models. In the standard model, prices are uniformly staggered but recent empirical evidence suggest that deviations from uniform staggering are common, This paper analyzes how synchronization of price changes affects the response to monetary policy shocks. I find that even large deviations from uniform staggering have small effects on the response in output. Aggregate dynamics in a model of uniform staggering may serve well as an approximation to a more complicated model with some degree of synchronization in price setting.

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Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 45 (2013)
Issue (Month): 6 (09)
Pages: 1017-1044

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Handle: RePEc:mcb:jmoncb:v:45:y:2013:i:6:p:1017-1044
Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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  1. Carrillo, Julio & Fève, Patrick & Matheron, Julien, 2007. "Monetary Policy Inertia or Persistent Shocks: A DSGE Analysis," IDEI Working Papers 431, Institut d'Économie Industrielle (IDEI), Toulouse.
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  14. repec:nbr:nberre:0126 is not listed on IDEAS
  15. Carlos Carvalho, 2005. "Heterogeneity in Price Setting and the Real Effects of Monetary Shocks," Macroeconomics 0509017, EconWPA, revised 12 Sep 2005.
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