The Price-Change Statistics We’ve Weighted For

Christopher Cotton and Vaishali Garga

No 26-2, Working Papers from Federal Reserve Bank of Boston

Abstract: The real effects of monetary policy depend on price stickiness. Existing studies that measure aggregate stickiness using US consumer price index microdata hold the consumption basket fixed. This yields a lower level of stickiness in 2024 compared with 1978. We show instead that stickiness is unchanged. Although individual products now change prices more frequently, the effect is largely offset by shifts in consumer spending, notably toward services with stickier prices. These consumption-basket shifts reduce the estimated decline in monetary non neutrality by 25 percentage points, suggesting that monetary policy remains far more effective than methods used in existing studies imply.

Keywords: Frequency of price changes; size of price changes; price stickiness; price distribution; monetary non-neutrality; consumer price index; expenditure weights (search for similar items in EconPapers)
JEL-codes: E31 E52 E58 (search for similar items in EconPapers)
Pages: 88
Date: 2026-04-01
New Economics Papers: this item is included in nep-cba and nep-mon
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DOI: 10.29412/res.wp.2026.06

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