Firm-specific capital, nominal rigidities and the business cycle

David Altig, Lawrence Christiano, Martin Eichenbaum and Jesper Lindé

Macroeconomic and microeconomic data paint conflicting pictures of price behavior. Macroeconomic data suggest that inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which resolves this apparent micro - macro conflict. Our model is consistent with post-war U.S. evidence on inflation inertia even though firms re-optimize prices on average once every 1.5 quarters. The key feature of our model is that capital is firm-specific and predetermined within a period.

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Year of publication:	December 2004
Authors:	Altig, David ; Christiano, Lawrence J. ; Eichenbaum, Martin S. ; Lindé, Jesper
Publisher:	Stockholm : Sveriges Riksbank
Subject:	Technology shocks \| Firm-specific capital \| Monetary policy \| Nominal rigidities \| Real rigidities \| Business cycles \| Inflation \| Preismanagement \| Pricing strategy \| Geldpolitik \| Konjunktur \| Business cycle \| Dynamisches Gleichgewicht \| Dynamic equilibrium \| Schätzung \| Estimation \| USA \| United States

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Extent:	1 Online-Ressource (circa 55 Seiten) Illustrationen
Series:	Sveriges Riksbank working paper series. - Stockholm : [Verlag nicht ermittelbar], ZDB-ID 2235780-4. - Vol. 176
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Graue Literatur ; Non-commercial literature ; Arbeitspapier ; Working Paper
Language:	English
Other identifiers:	hdl:10419/82461 [Handle]
Classification:	E30 - Prices, Business Fluctuations, and Cycles. General ; E40 - Money and Interest Rates. General ; E50 - Monetary Policy, Central Banking and the Supply of Money and Credit. General
Source:	ECONIS - Online Catalogue of the ZBW

Persistent link: https://www.econbiz.de/10011584699