From Hyperinflation to Stable Prices: Argentina’s Evidence on Menu Cost Models*

Álvarez, Fernando; González‐Rozada, Martín; Neumeyer, Andy; Beraja, Martin

doi:10.1093/qje/qjy022

Cited by 124 publications

(107 citation statements)

References 28 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Our main empirical contribution is to use a unique natural experiment generated by large aggregate VAT shocks that generates distinct predictions across alternative models. In this sense, our paper is closer to papers that use pricing observations during high trend inflation periods (Golosov and Lucas (2007), Gagnon (2009), Alvarez, Gonzalez-Rozada, Neumeyer, andBeraja (2011)) to provide supporting evidence on the state-dependent menu cost assumptions. The focus on learning about responses to one-time large shocks and contrasting alternative menu cost models differentiate our paper from these papers.…”

Section: Introductionsupporting

confidence: 65%

Menu Costs, Aggregate Fluctuations, and Large Shocks

Karádi

Reiff

2019

American Economic Journal: Macroeconomics

View full text Add to dashboard Cite

In menu cost models, real effects of aggregate nominal shocks are sensitive to unobserved characteristics of price setting. The standard way to calibrate key pricing parameters is to match the cross-sectional distribution of price changes. We argue that this unconditional distribution contains insufficient information for a clean identification. In particular, it is consistent with parameterizations with contradictory aggregate implications: one generating sizeable real effects, the other effective money neutrality. We argue, instead, that price change observations conditional on aggregate shocks can be sufficiently informative. To show this, we utilize new micro level evidence on price responses to large value-added tax shocks. We present a new menu cost model with idiosyncratic shocks and show that our model successfully predicts the magnitude of the observed price responses, outperforming alternative pricing models. The new model generates small real effects of monetary policy shocks implying that imposing the menu cost assumption alone fails to explain robust timeseries evidence finding the opposite. JEL codes: E31, E52

show abstract

Section: Introductionsupporting

confidence: 65%

Menu Costs, Aggregate Fluctuations, and Large Shocks

Karádi

Reiff

2019

American Economic Journal: Macroeconomics

View full text Add to dashboard Cite

show abstract

“…(), Campbell and Eden (), and Alvarez et al. (). Our use of state‐dependent pricing is in contrast to much of the literature incorporating real rigidities, which has assumed exogenously time‐dependent pricing.…”

Section: Introductionmentioning

confidence: 99%

“…State-dependent pricing is a key feature of our investigation. Recent evidence for state-dependence includes Eichenbaum et al (2011), Gagnon et al (2012, Campbell and Eden (2014), and Alvarez et al (2015). Our use of state-dependent pricing is in contrast to much of the literature incorporating real rigidities, which has assumed exogenously time-dependent pricing.…”

Section: Introductionmentioning

confidence: 99%

Real Rigidities and Nominal Price Changes

Klenow

Willis

2016

Economica

View full text Add to dashboard Cite

Real rigidities can help to generate persistent effects of monetary policy shocks. We analyse an industry equilibrium model with two types of real rigidities: a ‘micro’ real rigidity from a kinked demand curve, and a ‘macro’ real rigidity due to sticky intermediate prices. We estimate key model parameters using micro data from the US CPI, which features big movements in relative prices within and across sectors. The micro real rigidity necessitates large idiosyncratic shocks to productivity. The macro real rigidity does not entail such large idiosyncratic shocks, and is consistent with the volatility of sectoral TFP growth.

show abstract

“…Nevertheless, studies of high-inflation economies account for only a small portion of the literature. Papers analyzing periods of high inflation include Lach and Tsiddon (1992) for Israel (1978)(1979)(1980)(1981)(1982)(1983)(1984), 3 Konieczny and Skrzypacz (2005) for Poland (1990)(1991)(1992)(1993)(1994)(1995)(1996), Gagnon (2009) for Mexico (1994)(1995)(1996)(1997)(1998)(1999)(2000)(2001)(2002), Alvarez et al (2011) for Argentina (1988)(1989)(1990)(1991)(1992)(1993)(1994)(1995)(1996)(1997), and Wulfsberg (2016) for Norway . See Figure 1 for a comparison of 12-month inflation (%) among the cited countries and Brazil.…”

Section: Literature Reviewmentioning

confidence: 99%

“…When prices exhibit patterns of stickiness, both demand shocks and monetary policy have real economic effects. Indeed, sticky prices constitute a common microfoundation in many models, such as those developed by Taylor (1980), Calvo (1983), Reis (2006), Nakamura and Zerom (2010), Midrigan (2011), Alvarez and Lippi (2014), and Golosov and Lucas (2016). The speed at which an economy responds to a shock is directly related to the speed at which each firm reacts to it.…”

Section: Introductionmentioning

confidence: 99%

Price setting in Brazil from 1989 to 2007

Araujo¹

View full text Add to dashboard Cite

AGRADECIMENTOSEsta seção de agradecimentos inevitavelmente extrapola os anos de doutorado. Ela se remete a muito antes. Precisamente 12 anos atrás, quando iniciei meus estudos na FEA-USP.Na FEA conheci meus melhores amigos e vivi meus melhores anos. A FEA moldou meu pensamento crítico como economista e outros tantos traços essenciais sobre quem eu sou hoje. Cheia de tanto orgulho por esta jornada, sei que nãoé aqui que ela termina.Este trabalho também celebra mais de 10 anos de parceria com o prof. Mauro Rodrigues. Mauro, vocêé um economista, orientador, professor e pai fantástico. Obrigada.Agradeço também a todos os outros professores que passaram e ainda passarão pela minha vida. Quero um dia ser um pouco do que cada umé. Agradeço aos professores Márcio Nakane, Gabriel Madeira e Fábio Miessi pelo suporte essencial durante este doutorado. Obrigada prof. José Scheinkman por me receber em Columbia.A todos os alunos que já conheci, vocês são uma inesgotável fonte de inspiração e renovação. A docência ensina muito sobre buscar ser uma versão melhor de si mesmo para o outro. Obrigada.Agradeço também a todos com quem tive a oportunidade de trabalhar nestes 4 anos de doutorado. Aqui representados pelos meus ex-chefes José Francisco de Lima Gonçalves e Murilo Cavalcanti. Obrigada por acreditarem em mim. Tive muita sorte de ter vocês por perto. Obrigada, Bruna, pela companhia desde o trote da graduação e até o final da vida. Obrigada também pelo Tales e por todas as histórias que ainda viveremos juntos. Tenho o privilégio de estar rodeada por mulheres incríveis. Representando cada etapa da vida, obrigada Lia, Juliana e Gabriela. Obrigada Isabel, Natalia e Luísa, amadas companheiras do mestrado e pra vida. Obrigada também a todas as minhas amigas no mercado financeiro. Obrigada aos meus amigos de FEA e vida, em especial ao Gabriel, Bruno, João e Guilherme. Também agradeço aos meus amigos economistas do mestrado, doutorado, encontros acadêmicos ou reuniões de trabalho. A travessia foi mais fácil tão bem acompanhada. Agradeço aos meus pais, Monica e Fernando, pelo completo e irrestrito apoio. De vocês levo a coragem e determinação pra seguir em direção ao impossível. Amo vocês. Obrigada, Wilson. Amor da minha vida e alicerce de tudo o que virá. Se antes já viajávamos o mundo todo juntos, imagina só agora que esse doutorado acabou. Agradeço tambémà Fundação Instituto de Pesquisas Econômicas pelo auxílio financeiro e ao Banco Central do Brasil pela premiação no Prêmio Banco Central de Economia e Finanças.vi vii So I urge everyone -all women and men of goodwill -to dare the difference and bet on women. I promise you this: you will not be disappointed. For when women shine like the sun, their radiance will be forever undimmed.Christine Lagarde Tokyo, September 12, 2014 viii ix ABSTRACT This doctoral dissertation documents price-setting behavior in Brazil using a unique dataset of store-level price quotes collected by the Fundação Instituto de Pesquisas Econômicas (FIPE) to construct the Consumer Price Index (CPI-FIPE) from 1989...

show abstract

From Hyperinflation to Stable Prices: Argentina’s Evidence on Menu Cost Models*

Cited by 124 publications

References 28 publications

Menu Costs, Aggregate Fluctuations, and Large Shocks

Menu Costs, Aggregate Fluctuations, and Large Shocks

Real Rigidities and Nominal Price Changes

Price setting in Brazil from 1989 to 2007

Contact Info

Product

Resources

About