Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279270 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10520
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper examines the pass-through of cost-push shocks to customers at a granular level. Using unique firm-level survey data, we document five facts about pass-through across firms, sectors, and over time. We highlight a new channel relevant for pass-through: beliefs about the expected duration of the shock and its interaction with price rigidities. We then employ a hypothetical vignette to study the causal effect of nominal and real rigidities as well as the nature of the shock - size, duration, and economic environment - on pass-through. We observe gradual pass-through stretching over 24 months, especially for idiosyncratic shocks, undershooting the pass-through of aggregate shocks by 40%, in line with the presence of real rigidities. The survey design further allows us to infer the implied slope of the Phillips curve, which flattens after accounting for strategic complementarities.
Subjects: 
pass-through
cost shocks
firms
heterogeneous expectations
uncertainty
nominal rigidities
real rigidities
JEL: 
E24
E31
E50
E60
Document Type: 
Working Paper
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