Nonlinear Dynamics in Menu Cost Economies? Evidence from U.S. Data

Andres Blanco, Corina Boar () and Callum Jones

No 2024-11, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: We show that standard menu cost models cannot simultaneously reproduce the dispersion in the size of micro-price changes and the extent to which the fraction of price changes increases with inflation in the U.S. time-series. Though the Golosov and Lucas (2007) model generates fluctuations in the fraction of price changes, it predicts too little dispersion in the size of price changes and therefore little monetary nonneutrality. In contrast, versions of the model that reproduce the dispersion in the size of price changes and generate stronger monetary nonneutrality predict a nearly constant fraction of price changes.

Keywords: menu costs; inflation; fraction of price changes (search for similar items in EconPapers)
JEL-codes: E31 E32 E52 (search for similar items in EconPapers)
Pages: 19
Date: 2024-09-23
References: Add references at CitEc
Citations:

Published in 2024

Downloads: (external link)
https://www.atlantafed.org/-/media/documents/resea ... nce-from-us-data.pdf Full text (application/pdf)

Related works:
Working Paper: Nonlinear Dynamics in Menu Cost Economies? Evidence from U.S. Data (2024)
Working Paper: Nonlinear Dynamics in Menu Cost Economies? Evidence from U.S. Data (2024)
Working Paper: Nonlinear Dynamics in Menu Cost Economies? Evidence from U.S. Data (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedawp:99188

Ordering information: This working paper can be ordered from

DOI: 10.29338/wp2024-11

Access Statistics for this paper

More papers in FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta Contact information at EDIRC.
Bibliographic data for series maintained by Rob Sarwark ().