Price rigidities and the granular origins of aggregate fluctuations
Ernesto Pasten (),
Raphael Schoenle and
Michael Weber ()
No 2102, Working Paper Series from European Central Bank
We study the aggregate implications of sectoral shocks in a multi-sector New Keynesian model featuring sectoral heterogeneity in price stickiness, sector size, and input-output linkages. We calibrate a 341 sector version of the model to the United States. Both theoretically and empirically, sectoral heterogeneity in price rigidity (i) generates sizable GDP volatility from sectoral shocks, (ii) amplifies both the “granular” and the “network” effects, (iii) alters the identity and relative contributions of the most important sectors for aggregate fluctuations, (iv) can change the sign of fluctuations, (v) invalidates the Hulten (1978) Theorem, and (vi) generates a “frictional” origin of aggregate fluctuations. JEL Classification: E31, E32, O40
Keywords: idiosyncratic shocks; input-output linkages; sticky prices (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta, nep-dge, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (5) Track citations by RSS feed
Downloads: (external link)
Working Paper: Price rigidities and the granular origins of aggregate fluctuations (2018)
Working Paper: Price Rigidities and the Granular Origins of Aggregate Fluctuations (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20172102
Access Statistics for this paper
More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().