Sectoral Price Rigidity and Aggregate Dynamics


  • Cahiers de recherche


  • In this paper, we study the macroeconomic implications of sectoral heterogeneity and, in particular, heterogeneity in price setting, through the lens of a highly disaggregated multi-sector model. The model incorporates several realistic features and is estimated using a mix of aggregate and sectoral U.S. data. The frequencies of price changes implied by our estimates are remarkably consistent with those reported in micro-based studies, especially for non-sale prices. The model is used to study (i) the contribution of sectoral characteristics to the observed cross-sectional heterogeneity in sectoral output and inflation responses to a monetary policy shock, (ii) the implications of sectoral price rigidity for aggregate output and inflation dynamics and for cost pass-through, and (iii) the role of sectoral shocks in explaining sectoral prices and quantities.

fecha de publicación

  • 2009

Líneas de investigación

  • Monetary Policy
  • Multi-Sector Models
  • Price Stickiness
  • Sectoral Shocks
  • Simulated Method of Moments


  • 906