Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/108115
Authors: 
Karádi, Péter
Reiff, Àdám
Year of Publication: 
2007
Series/Report no.: 
IEHAS Discussion Papers MT-DP - 2007/6
Abstract: 
The paper explains the observed asymmetric inflation response to value-added tax (VAT) changes in Hungary by calibrating a standard sectoral menu cost model on a new micro-level CPI data set. The model is able to reproduce important moments of the data, and finds that the asymmetry can be explained by the interaction of menu costs, (sectoral) trend inflation and forward-looking firms, thereby it provides direct evidence to the argument of Ball and Mankiw (1994).
Subjects: 
Menu Cost
Inflation Asymmetry
Sectoral Heterogeneity
Value-Added Tax
JEL: 
E30
ISBN: 
978-963-9796-03-4
Document Type: 
Working Paper

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