Relative Prices as Aggregate Supply Shocks with Trend Inflation

David Demery and Nigel W. Duck

Journal of Money, Credit and Banking, 2008, vol. 40, issue 2‐3, 389-408

Abstract: Ball and Mankiw (1995) use a static menu‐cost model to explain the historical behavior of the first and higher moments of commodity price changes in U.S. producer prices. We show that when appropriately modified for a world of positive trend inflation and forward‐looking behavior by firms, the menu‐cost model predicts a much weaker (possibly zero) correlation between the mean and the skewness of price changes than that found in the data.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/j.1538-4616.2008.00118.x

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:wly:jmoncb:v:40:y:2008:i:2-3:p:389-408

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley Content Delivery ().