Impact of the degree of price rigidity on the possibilities of monetary policy

Влияние степени жесткости цен на возможности денежно-кредитной политики

Alexandra Bozhechkova, Dobronravova, Elizaveta (Добронравова, Елизавета) (dobronravova-ep@ranepa.ru), Evseev, Alexey (Евсеев, Алексей) (evseev-as@rane.ru), Shemyakina, Kira (Шемякина, Кира) (shemyakina-ka@rane.ru) and Pavel Trunin
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Dobronravova, Elizaveta (Добронравова, Елизавета): The Russian Presidential Academy of National Economy and Public Administration
Evseev, Alexey (Евсеев, Алексей): The Russian Presidential Academy of National Economy and Public Administration
Shemyakina, Kira (Шемякина, Кира): The Russian Presidential Academy of National Economy and Public Administration

Working Papers from Russian Presidential Academy of National Economy and Public Administration

Abstract: In this paper we estimate the level of price rigidity in Russian economy. First we review the main theoretical models of price setting, the methods used to estimate the level of price rigidity using micro-data on the prices of particular goods and services and indirectly using the data on the dynamics of macroeconomic indicators. Then we present the results of microestimates of price rigidity based on online-prices, which were collected using web-scrapping techniques. The average price duration for food commodities is estimated at 2.6 months. We also do the calibration of price rigidity parameters in a structural model of the production sector using macroeconomic data. According to our estimates, the average price duration in Russian economy doesn’t exceed 4.5 months, which is much less than standard values (3-4 quarters) used in DSGE-models.

Pages: 64 pages
Date: 2020-05
New Economics Papers: this item is included in nep-cis, nep-mac and nep-mon
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