Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25514
Authors: 
Midrigan, Virgiliu
Year of Publication: 
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: 
Document Type: 
Working Paper

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