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Price-Setting in Mexico and the Real Effects of Monetary Shocks

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  • Kochen Federico

Abstract

In this paper I use novel micro data underlying the Mexican CPI to establish stylized facts about prices in the Mexican economy. I then analyze the implications and consistency of the empirical results for the degree of monetary non-neutrality generated in both time and state-dependent pricing models. I find that the real effects of monetary shocks importantly depend on the type of nominal rigidity considered and on the treatment of sales in the statistics that are calibrated into the models.

Suggested Citation

  • Kochen Federico, 2016. "Price-Setting in Mexico and the Real Effects of Monetary Shocks," Working Papers 2016-21, Banco de México.
    • Handle: RePEc:bdm:wpaper:2016-21
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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7BD85301B7-21C7-AFB5-4FFF-2FAE731F8CDC%7D.pdf
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    More about this item

    Keywords

    Price Micro Data; Price Rigidity; Menu Cost Models;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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