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Price Stickiness and Sectoral Inflation Persistence: Additional Evidence

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  • Le Bihan, H.
  • Matheron, J.

Abstract

In this paper, using US as well as French sectoral data and indicators of price rigidity, we re-examine the (lack of) relation between price stickiness and inflation persistence. This has recently been put forward by Bils and Klenow (2004) as evidence against time-dependent price setting models. We obtain that, when filtering out sector-specific shocks along the lines of Boivin et al. (2009), and allowing for an alternative assumption on the marginal cost process, the case against the time-dependent Calvo model is substantially weakened.

Suggested Citation

  • Le Bihan, H. & Matheron, J., 2011. "Price Stickiness and Sectoral Inflation Persistence: Additional Evidence," Working papers 353, Banque de France.
  • Handle: RePEc:bfr:banfra:353
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. David Berger & Ricardo J. Caballero & Eduardo Engel, 2003. "Missing Aggregate Dynamics: On the Slow Convergence of Lumpy Adjustment Models," NBER Working Papers 9898, National Bureau of Economic Research, Inc.
    2. Andrade, Philippe & Zachariadis, Marios, 2016. "Global versus local shocks in micro price dynamics," Journal of International Economics, Elsevier, pages 78-92.
    3. di Mauro, Filippo & Ottaviano, Gianmarco I.P. & Vicard, Vincent & Altomonte, Carlo & Rungi, Armando, 2012. "Global value chains during the great trade collapse: a bullwhip effect?," Working Paper Series 1412, European Central Bank.
    4. Giannellis, Nikolaos, 2013. "Asymmetric behavior of inflation differentials in the euro area: Evidence from a threshold unit root test," Research in Economics, Elsevier, pages 133-144.
    5. Andrade, Philippe & Zachariadis, Marios, 2016. "Global versus local shocks in micro price dynamics," Journal of International Economics, Elsevier, pages 78-92.
    6. David Berger & Ricardo J. Caballero & Eduardo Engel, 2003. "Missing Aggregate Dynamics: On the Slow Convergence of Lumpy Adjustment Models," NBER Working Papers 9898, National Bureau of Economic Research, Inc.
    7. Ratti, Ronald A. & Vespignani, Joaquin L., 2015. "What drives the global interest rate," Globalization and Monetary Policy Institute Working Paper 241, Federal Reserve Bank of Dallas.
    8. Ronald A. Ratti & Joaquin L. Vespignani, 2014. "Oil prices and the economy: A global perspective," CAMA Working Papers 2014-41, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    9. Ratti, Ronald A. & Vespignani, Joaquin L., 2016. "Oil prices and global factor macroeconomic variables," Energy Economics, Elsevier, pages 198-212.
    10. Yanli LI, Hongfeng PENG & Hongfeng PENG, 2013. "Inflation Persistence in Nine Latin American Countries: Panel SURKSS Test with a Fourier Function," Journal for Economic Forecasting, Institute for Economic Forecasting, pages 132-143.
    11. Ratti, Ronald A. & Vespignani, Joaquin L., 2016. "Oil prices and global factor macroeconomic variables," Energy Economics, Elsevier, pages 198-212.

    More about this item

    Keywords

    Sticky prices; Heterogeneity; Inflation persistence.;

    JEL classification:

    • 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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