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In Search of Real Rigidities

  • Oleg Itskhoki

    (Princeton)

  • Gita Gopinath

    (Harvard)

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.

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Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1337.

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Date of creation: 2010
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Handle: RePEc:red:sed010:1337
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Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

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