Models of price setting and inflation dynamics

James Costain and Anton Nakov

No 2416, Occasional Papers from Banco de España

Abstract: We review models of nominal price adjustment based on optimizing or near-optimal behavior, including menu cost models, generalized hazard function models and models of frictional decisions. We also discuss the role of real rigidities and assess the models’ success in explaining retail microdata and inflation dynamics.

Keywords: sticky prices; nominal rigidities; state-dependent prices; inflation; menu costs; control costs; rational inattention (search for similar items in EconPapers)
JEL-codes: E31 E71 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2024-05
New Economics Papers: this item is included in nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bde:opaper:2416e

DOI: 10.53479/36592

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