Resource title

Menu costs, multi-product firms, and aggregate fluctuations

Resource image

image for OpenScout resource :: Menu costs, multi-product firms, and aggregate fluctuations

Resource description

I employ a large set of scanner price data collected in retail stores to document that (i) although the average magnitude of price changes is large, a substantial number of price changes are small in absolute value; (ii) the distribution of non-zero price changes has fat tails; and (iii) stores tend to adjust prices of goods in narrow product categories simultaneously. I extend the standard menu costs model to a multi-product setting in which firms face economies of scale in the technology of adjusting prices. The model, because of its ability to replicate this additional set of micro-economic facts, can generate aggregate fluctuations much larger than those in standard menu costs economies.

Resource author

Virgiliu Midrigan

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25514

Resource license

Adapt according to the presented license agreement and reference the original author.