Working Paper: NBER ID: w16283
Authors: Brent Neiman
Abstract: Recent analyses of transaction-level datasets have generated new stylized facts on price setting and greatly influenced the empirical open- and closed-economy macroeconomics literatures. This work has uncovered marked heterogeneity in price stickiness, demonstrated that even non-zero price changes do not fully "pass through" exchange rate shocks, and offered evidence of synchronization in the timing of price changes. Further, intrafirm prices have been shown to differ from arm's length prices in each of these characteristics. This paper develops a state-dependent model of intermediate goods pricing, which allows for arm's length and intrafirm transactions, and is capable of generating these empirical pricing patterns.
Keywords: No keywords provided
JEL Codes: E3; F1; L11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| elasticity of demand (D12) | price stickiness (L11) |
| cost shocks (D24) | price decisions (L11) |
| market structure (D49) | pricing dynamics (D49) |
| production cost shocks (D24) | passthrough rates (G19) |
| arms length transactions (F16) | synchronization of price changes (P22) |
| intrafirm transactions (L14) | synchronization of price changes (P22) |