What do micro price data tell us on the validity of the New Keynesian Phillips Curve?

Luis J. Alvarez

No 728, Banco de España Working Papers from Banco de España

Abstract: The New Keynesian Phillips Curve (NKPC) is now the dominant model of inflation dynamics. In recent years, a large body of empirical research has documented price-setting behaviour at the individual level, allowing the assessment of the micro-foundations of pricing models. This paper analyses the implications of 25 theoretical models in terms of individual behaviour and finds that they considerably differ in their ability to match the key micro stylised facts. However, none is available to account for all of them, suggesting the need to develop more realistic micro-founded price setting models.

Keywords: Pricing models; micro data; Phillips Curve; hazard rate (search for similar items in EconPapers)
JEL-codes: E31 D40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mac
Date: 2007-09
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Related works:
Working Paper: What Do Micro Price Data Tell Us on the Validity of the New Keynesian Phillips Curve? (2007)
Working Paper: What Do Micro Price Data Tell Us on the Validity of the New Keynesian Phillips Curve? (2007)
Journal Article: What Do Micro Price Data Tell Us on the Validity of the New Keynesian Phillips Curve? (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:bde:wpaper:0729

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