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Title:Menu costs, multi-product firms, and aggregate fluctuations PDF Logo
Authors:Midrigan, Virgiliu
Issue Date:2006
Series/Report no.:CFS Working Paper 2007/13
Abstract:I employ a large set of scanner price data collected in retail stores to document that (i) although the average magnitude of price changes is large, a substantial number of price changes are small in absolute value; (ii) the distribution of non-zero price changes has fat tails; and (iii) stores tend to adjust prices of goods in narrow product categories simultaneously. I extend the standard menu costs model to a multi-product setting in which firms face economies of scale in the technology of adjusting prices. The model, because of its ability to replicate this additional set of micro-economic facts, can generate aggregate fluctuations much larger than those in standard menu costs economies.
Subjects:State-Dependent Pricing
Multi-Products Firms
JEL:E31
E32
Persistent Identifier of the first edition:urn:nbn:de:hebis:30-38230
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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