Pass-Through of Cost-Push Shocks

Arbeitspapier

This paper examines the pass-through of cost-push shocks to customers at a granular level. Using unique firm-level survey data, we document five facts about pass-through across firms, sectors, and over time. We highlight a new channel relevant for pass-through: beliefs about the expected duration of the shock and its interaction with price rigidities. We then employ a hypothetical vignette to study the causal effect of nominal and real rigidities as well as the nature of the shock - size, duration, and economic environment - on pass-through. We observe gradual pass-through stretching over 24 months, especially for idiosyncratic shocks, undershooting the pass-through of aggregate shocks by 40%, in line with the presence of real rigidities. The survey design further allows us to infer the implied slope of the Phillips curve, which flattens after accounting for strategic complementarities.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10520

Classification and Topics

• Classification: Wirtschaft ; Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity ; Price Level; Inflation; Deflation ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General ; Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: General
• Subject: pass-through ; cost shocks ; firms ; heterogeneous expectations ; uncertainty ; nominal rigidities ; real rigidities

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gödl-Hanisch, Isabel ; Menkhoff, Manuel
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/279270
• Last update: 10.03.2025, 11:44 AM CET