Firm-specific capital, nominal rigidities, and the business cycle

David Altig, Lawrence Christiano, Martin Eichenbaum and Jesper Lindé

No 416, Working Papers (Old Series) from Federal Reserve Bank of Cleveland

Abstract: Macroeconomic and microeconomic data paint conflicting pictures of price behavior. Macroeconomic data suggest that inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which resolves this apparent micro - macro conflict. Our model is consistent with post-war U.S. evidence on inflation inertia even though firms re-optimize prices on average once every 1.5 quarters. The key feature of our model is that capital is firm-specific and predetermined within a period.

Keywords: Inflation (Finance); Monetary policy; Business cycles (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (104)

Downloads: (external link)
https://doi.org/10.26509/frbc-wp-200416 Persistent link
https://www.clevelandfed.org/-/media/project/cleve ... siness-cycle-pdf.pdf Full text (application/pdf)

Related works:
Journal Article: Firm-Specific Capital, Nominal Rigidities and the Business Cycle (2011)
Working Paper: Firm-specific capital, nominal rigidities and the business cycle (2010)
Working Paper: Firm-Specific Capital, Nominal Rigidities and the Business Cycle (2005)
Working Paper: Firm-Specific Capital, Nominal Rigidities and the Business Cycle (2005)
Working Paper: Firm-specific capital, nominal rigidities and the business cycle (2004)
Working Paper: Firm-Specific Capital, Nominal Rigidities and the Business Cycle (2004)
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:fedcwp:0416

Ordering information: This working paper can be ordered from

DOI: 10.26509/frbc-wp-200416

Access Statistics for this paper

More papers in Working Papers (Old Series) from Federal Reserve Bank of Cleveland Contact information at EDIRC.
Bibliographic data for series maintained by 4D Library ().