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In Search of Real Rigidities

Author

Listed:
  • Oleg Itskhoki

    (Princeton)

  • Gita Gopinath

    (Harvard)

Abstract

Are quantitatively important real rigidities present in the data? The answer appears to depend on what data one looks at. Recent studies using price data underlying US CPI index provide evidence suggesting a limited role for real rigidities. Evidence from international prices, however, points towards the importance of strategic complementarities in price setting resulting in considerable pricing-to-market effects. This paper provides further evidence on the role of real rigidities and then proposes a theory to bridge the gap between the two sets of facts.

Suggested Citation

  • Oleg Itskhoki & Gita Gopinath, 2010. "In Search of Real Rigidities," 2010 Meeting Papers 1337, Society for Economic Dynamics.
  • Handle: RePEc:red:sed010:1337
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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