Price Stickiness and Sectoral Inflation Persistence: Additional Evidence

Hervé Le Bihan and Julien Matheron

Journal of Money, Credit and Banking, 2012, vol. 44, issue 7, 1427-1442

Abstract: In this paper, using U.S. as well as French sectoral data and indicators of price rigidity, we reexamine the (lack of) relation between price stickiness and inflation persistence. This has recently been put forward by Bils and Klenow (2004) as evidence against time‐dependent price setting models. We obtain that, when filtering out sector‐specific shocks along the lines of Boivin, Giannoni, and Mihov (2009), and allowing for an alternative assumption on the marginal cost process, the case against the time‐dependent Calvo model is substantially weakened.

Date: 2012
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https://doi.org/10.1111/j.1538-4616.2012.00538.x

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Journal Article: Price Stickiness and Sectoral Inflation Persistence: Additional Evidence (2012)
Working Paper: Price Stickiness and Sectoral Inflation Persistence: Additional Evidence (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:44:y:2012:i:7:p:1427-1442

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