Sectoral heterogeneity in nominal price rigidity and the origin of aggregate fluctuations
By: Pastén, E., Schoenle, R. and Weber, M
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Material type: 
BookPublisher: American Economic Journal: Microeconomics Description: 16(2), Apr, 2024: p.318-352.Subject(s): Macroeconomics, nominal price rigidity, aggregate fluctuations, sectoral productivity shocks, sectoral heterogeneity, GDP volatility, aggregate price volatility, pricing friction, economic models, aggregate shocks, central sectors, sectoral prices
In:
American Economic Journal: MicroeconomicsSummary: We study the role of heterogeneity in nominal price rigidity for aggregate fluctuations in a model with sectoral productivity shocks. Theoretically, sectoral heterogeneity in the pricing friction has an ambiguous effect on GDP and aggregate price volatility. Quantitatively, (i) GDP volatility is amplified when the friction is heterogeneous rather than homogeneous; (ii) sectoral shocks can jointly rationalize the volatility of sectoral prices, aggregate prices, and GDP, unlike aggregate shocks; and (iii) shocks to the largest or most central sectors may not matter in the aggregate as heterogeneous pricing frictions may alter the identity of the most important sectors for aggregate fluctuations.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mac.20210460
| Item type | Current location | Call number | Vol info | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 16(2), Apr, 2024: p.318-352 | Available | AR131742 |
We study the role of heterogeneity in nominal price rigidity for aggregate fluctuations in a model with sectoral productivity shocks. Theoretically, sectoral heterogeneity in the pricing friction has an ambiguous effect on GDP and aggregate price volatility. Quantitatively, (i) GDP volatility is amplified when the friction is heterogeneous rather than homogeneous; (ii) sectoral shocks can jointly rationalize the volatility of sectoral prices, aggregate prices, and GDP, unlike aggregate shocks; and (iii) shocks to the largest or most central sectors may not matter in the aggregate as heterogeneous pricing frictions may alter the identity of the most important sectors for aggregate fluctuations.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mac.20210460
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