Measuring price selection in microdata: it’s not there

Peter Karadi, Raphael Schoenle and Jesse Wursten

No 2566, Working Paper Series from European Central Bank

Abstract: We use microdata to estimate the strength of price selection { a key metric for the effect of monetary policy on the real economy. We propose a product-level proxy for mispricing and assess whether products with larger mispricing respond with a higher probability to identified monetary and credit shocks. We find that they do not, suggesting selection is absent. Instead, we detect state-dependent adjustment on the gross extensive margin. Our results are broadly consistent with second-generation state-dependent pricing models and sizable effects of monetary policy on the real economy. JEL Classification: E31, E32, E52

Keywords: identified credit and monetary policy shocks; monetary non-neutrality; PPI microdata; price-gap proxy; scanner data; state-dependent pricing (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Note: 1871516
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Measuring Price Selection in Microdata - It's Not There (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20212566

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