Menu costs, multi-product firms, and aggregate fluctautions

  • 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. JEL Classification: E31, E32

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Metadaten
Author:Virgiliu Midrigan
URN:urn:nbn:de:hebis:30-38230
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2007,13
Series (Serial Number):CFS working paper series (2007, 13)
Document Type:Working Paper
Language:English
Year of Completion:2007
Year of first Publication:2007
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2007/02/23
Tag:Multi-Products Firms; State-Dependent Pricing
GND Keyword:Mehrproduktbetrieb; Preisbildung
Issue:January 2006
Page Number:62
HeBIS-PPN:190112824
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht