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Title: Sectoral Price Rigidity and Aggregate Dynamics
Authors: Bouakez, Hafedh
Cardia, Emanuela
Ruge-Murcia, Francisco J.
Keywords: Multi-sector models
price stickiness
simulated method of moments
sectoral shocks
monetary policy
Issue Date: 2009-02
Series/Report no.: Cahiers du CIRPÉE;09-06
Abstract: 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.
URI: http://132.203.59.36/CIRPEE/cahierscirpee/2009/files/CIRPEE09-06.pdf
https://depot.erudit.org/id/002988dd
Appears in Collections:Cahiers de recherche du CIRPÉE

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