Measuring price selection in microdata: It's not there

Arbeitspapier

We use microdata to estimate the strength of price selection - a key metric for the effect of monetary policy on the real economy. We propose a product-level proxy for mispricing and assess whether products with larger mispricing respond with a higher probability to identified monetary and credit shocks. We find that they do not, suggesting selection is absent. Instead, we detect state-dependent adjustment on the gross extensive margin. Our results are broadly consistent with second-generation state-dependent pricing models and sizable effects of monetary policy on the real economy.

Object Details

• ISBN: 978-92-899-4752-7
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2566

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Monetary Policy
• Subject: monetary non-neutrality ; state-dependent pricing ; identified credit and monetary policy shocks ; price-gap proxy ; scanner data ; PPI microdata

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Karadi, Peter ; Schoenle, Raphael ; Wursten, Jesse
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2021

Further information

• DOI: doi:10.2866/510642
• Handle: http://hdl.handle.net/10419/237705
• Last update: 10.03.2025, 11:42 AM CET