EVALUATING MICROFOUNDATIONSFOR AGGREGATE PRICE RIGIDITIES EVIDENCE FROM MATCHED FIRM-LEVEL DATA ON PRODUCT PRICES AND UNIT LABOR COST

Using data on product-level prices matched to the producing rms unit labor cost, wereject the hypothesis of a full and immediate pass-through of marginal cost. Since wefocus on idiosyncratic variation, this does not t the predictions of the Ma´ckowiak andWiederholt (2009) version of the Rational Inattention Model. Neither do we nd thatrms react strongly to predictable marginal cost changes, as expected from the Mankiwand Reis (2002) Sticky Information Model. We nd that...

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Year of publication:	2009-08-01
Authors:	Carlsson, Mikael ; Nordström Skans, Oskar
Published in:	Working papers published in 2009 ECB Working Paper Series No. 1083, August 2009
Subject:	Preispolitik \| pricing policy \| Konjunktur \| Information \| information

Abstract
Non-technical summary
1 Introduction
2 Related literature
3 Theory
4 Data and empirical strategy
4.1 Data
4.2 Instrumentation
4.3 Taking the models to the data
5 Results
6 Concluding discussion
References
Appendices
European Central Bank Working Paper Series

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