Arbeitspapier

Real and nominal frictions within the firm: How lumpy investment matters for price adjustment

Real rigidities are an important feature of modern sticky price models and are policyrelevant because of their welfare consequences, but cannot be structurally identified from time series. I evaluate the plausibility of capital specificity as a source of real rigidities using a two-dimensional generalized (s,S) model calibrated to micro evidence. Capital lumpiness reduces price stickiness as endogenous fluctuations in the marginal cost of output increase willingness to pay menu costs (an extensive effect), but increases price stickiness through complementarities (an intensive effect). The extensive effect warrants higher menu costs to match evidence on price changes, and the effects of complementarities prevail.

Sprache
Englisch

Erschienen in
Series: Bank of Canada Working Paper ; No. 2009-36

Klassifikation
Wirtschaft
General Aggregative Models: Keynes; Keynesian; Post-Keynesian
Investment; Capital; Intangible Capital; Capacity
Price Level; Inflation; Deflation
Thema
Transmission of monetary policy
Preisrigidität
Wohlfahrtseffekt
Kapitalkosten
Willingness to pay
Theorie

Ereignis
Geistige Schöpfung
(wer)
Johnston, Michael K.
Ereignis
Veröffentlichung
(wer)
Bank of Canada
(wo)
Ottawa
(wann)
2009

DOI
doi:10.34989/swp-2009-36
Handle
Letzte Aktualisierung
20.09.2024, 08:21 MESZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Johnston, Michael K.
  • Bank of Canada

Entstanden

  • 2009

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