Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/237705
Authors: 
Karadi, Peter
Schoenle, Raphael
Wursten, Jesse
Year of Publication: 
2021
Series/Report no.: 
ECB Working Paper No. 2566
Abstract: 
We use microdata to estimate the strength of price selection - a key metric for the effect of monetary policy on the real economy. We propose a product-level proxy for mispricing and assess whether products with larger mispricing respond with a higher probability to identified monetary and credit shocks. We find that they do not, suggesting selection is absent. Instead, we detect state-dependent adjustment on the gross extensive margin. Our results are broadly consistent with second-generation state-dependent pricing models and sizable effects of monetary policy on the real economy.
Subjects: 
monetary non-neutrality
state-dependent pricing
identified credit and monetary policy shocks
price-gap proxy
scanner data
PPI microdata
JEL: 
E31
E32
E52
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4752-7
Document Type: 
Working Paper

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