Price Changes and Monetary Non-Neutrality

Chen Yeh
Additional contact information
Chen Yeh: https://www.richmondfed.org/research/people/yeh

Richmond Fed Economic Brief, 2022, vol. 22, issue 41

Abstract: Economists have not reached a consensus on the effectiveness of monetary policy for stimulating short-run consumption. While quantitative models are typically disciplined through average pricing moments in the data, this is not sufficient to draw conclusions on monetary non-neutrality. In this article, we quantify the importance of the age-dependence of pricing moments for monetary policy. In particular, we show that newer products change their prices more often and by a larger amount. Furthermore, these patterns are supported by a price experimentation narrative. Finally, we quantify that the stimulus effect of monetary policy can be more than three times as large when allowing for price experimentation consistent with pricing patterns of the data.

Keywords: monetary policy; pricing; consumption (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.richmondfed.org/publications/research/ ... 17b8dca4af-114405295 Briefing (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedreb:94905

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Richmond Fed Economic Brief from Federal Reserve Bank of Richmond Contact information at EDIRC.
Bibliographic data for series maintained by Christian Pascasio ().