Sectoral Price Rigidity and Aggregate Dynamics

Publicado en

  • European Economic Review


  • This paper studies the business cycle implications of sectoral heterogeneity in price rigidity using a highly disaggregated multi-sector model. The model is estimated by the Simulated Method of Moments using a mix of aggregate and sectoral U.S. data. The frequencies of price changes implied by our estimates are consistent with those reported in micro-based studies. We show that heterogeneity in price rigidity is the primary factor explaining the heterogeneity in the responses of sectoral output and inflation to a monetary policy shock. We also find that ignoring sectoral heterogeneity in price rigidity leads to the mismeasurement of the relative importance of aggregate and sector-specific shocks in aggregate and sectoral fluctuations.

fecha de publicación

  • 2014

Líneas de investigación

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

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