Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82461
Authors: 
Altig, David
Christiano, Lawrence
Eichenbaum, Martin
Lindé, Jesper
Year of Publication: 
2004
Series/Report no.: 
Sveriges Riksbank Working Paper Series 176
Abstract: 
Macroeconomic and microeconomic data paint conflicting pictures of price behavior. Macroeconomic data suggest that inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which resolves this apparent micro - macro conflict. Our model is consistent with post-war U.S. evidence on inflation inertia even though firms re-optimize prices on average once every 1.5 quarters. The key feature of our model is that capital is firm-specific and predetermined within a period.
Subjects: 
Technology shocks
Firm-specific capital
Monetary policy
Nominal rigidities
Real rigidities
Business cycles
JEL: 
E30
E40
E50
Document Type: 
Working Paper

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