IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

The responses of prices at different stages of production to monetary policy shocks

  • Todd E. Clark

This paper examines the responses of prices at different stages of production to an explicitly identified demand shock: a monetary policy shock. The frameworks of Christiano, Eichenbaum, and Evans (1994, 1996) and Sims and Zha (1995b) are used to identify the policy shock as the innovation to the federal funds rate in a VAR. The adjustment of prices at different stages of production is examined by adding three different sets of prices to the basic VAR model: (a) the PPIs for crude materials, intermediate goods, and finished goods; (b) the newer industry-based PPIs of input and output prices for crude, primary, semifinished, finished, and final goods processors; and (c) the input and output price indexes for manufacturing industries constructed by Roberts, Stockton, and Struckmeyer (1994). The analysis shows that, at earlier stages of production, a monetary tightening causes input prices to fall more rapidly and by a larger amount than output prices. This finding would appear to be consistent with a model in which all price changes are subject to menu costs but some chain structure in production gives rise to prices at earlier stages of production moving more than prices at later stages.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by Federal Reserve Bank of Kansas City in its series Research Working Paper with number 96-12.

as
in new window

Length:
Date of creation: 1996
Date of revision:
Handle: RePEc:fip:fedkrw:96-12
Contact details of provider: Postal: 1 Memorial Drive, Kansas City, MO 64198-0001
Phone: (816) 881-2254
Web page: http://www.kansascityfed.org/

More information through EDIRC

Order Information: Email:


No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:fip:fedkrw:96-12. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lu Dayrit)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.