State-Dependent or Time-Dependent Pricing: Does It Matter for Recent U.S. Inflation?

Pete Klenow and Oleksiy Kryvtsov

No 07-007, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: In the 1988-2004 micro data collected by the U.S. Bureau of Labor Statistics for the CPI, price changes are frequent (every 4-7 months, depending on the treatment of sale prices) and large in absolute value (on the order of 10%). The size and timing of price changes varies considerably for a given item, but the size and probability of a price change are unrelated to the time since the last price change. Movements in aggregate inflation reflect movements in the size of price changes rather than the fraction of items changing price, due to offsetting movements in the fraction of price increases and decreases. Neither leading time-dependent models (Taylor or Calvo) nor 1st generation state-dependent models match all of these facts. Some 2nd generation state-dependent models, however, appear broadly consistent with the empirical patterns.

Keywords: inflation; U.S.; state-dependent; time-dependent; CPI (search for similar items in EconPapers)
JEL-codes: E31 E37 (search for similar items in EconPapers)
Date: 2007-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www-siepr.stanford.edu/repec/sip/07-007.pdf (application/pdf)

Related works:
Journal Article: State-Dependent or Time-Dependent Pricing: Does it Matter for Recent U.S. Inflation? (2008)
Working Paper: State-Dependent or Time-Dependent Pricing: Does It Matter for Recent U.S. Inflation? (2005)
Working Paper: State-Dependent or Time-Dependent Pricing: Does it Matter for Recent U.S. Inflation? (2005)
Working Paper: State-Dependent or Time-Dependent Pricing: Does It Matter For Recent U.S. Inflation? (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:sip:dpaper:07-007

Access Statistics for this paper

More papers in Discussion Papers from Stanford Institute for Economic Policy Research Contact information at EDIRC.
Bibliographic data for series maintained by Anne Shor ( this e-mail address is bad, please contact ).