Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/153517
Authors: 
Carlsson, Mikael
Nordström Skans, Oskar
Year of Publication: 
2009
Series/Report no.: 
ECB Working Paper 1083
Abstract: 
Using data on product-level prices matched to the producing �rm�s unit labor cost, we reject the hypothesis of a full and immediate pass-through of marginal cost. Since we focus on idiosyncratic variation, this does not �t the predictions of the Ma´ckowiak and Wiederholt (2009) version of the Rational Inattention Model. Neither do we �nd that �rms react strongly to predictable marginal cost changes, as expected from the Mankiw and Reis (2002) Sticky Information Model. We �nd that, in line with Staggered Contracts models, �rms consider both the current and future expected marginal cost when setting prices with a sum of coe¢ cients not signi�cantly di¤erent from unity.
Subjects: 
business cycles
Information
Micro Data
price setting
JEL: 
D8
E3
L1
Document Type: 
Working Paper

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