Menu Costs and Inflation Asymmetries Some Micro Data Evidence
The paper explains the observed asymmetric inflation response to value-added tax (VAT) changes in Hungary by calibrating a standard sectoral menu cost model on a new micro-level CPI data set. The model is able to reproduce important moments of the data, and finds that the asymmetry can be explained by the interaction of menu costs, (sectoral) trend inflation and forward-looking firms, thereby it provides direct evidence to the argument of Ball and Mankiw (1994).
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"Managerial and Customer Costs of Price Adjustment: Direct Evidence from Industrial Markets,"
2003-07, Bar-Ilan University, Department of Economics.
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"State Dependent Pricing And Business Cycle Asymmetries,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(1), pages 281-310, 02.
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2007 Meeting Papers
844, Society for Economic Dynamics.
- Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, Oxford University Press, vol. 123(4), pages 1415-1464.
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