Journal of Monetary Economics 2015 DOI: 10.1016/j.jmoneco.2015.09.002 View full text
Carlos Carvalho, Felipe Schwartzman

Abstract: AbstractGiven the frequency of price changes, the real e¤ects of a monetary shock are smaller if adjusting …rms are disproportionately likely to be ones with prices set before the shock. This selection e¤ ect is important in a large class of sticky-price models with time-dependent price adjustment. We provide a very general analytical characterization of the relationship between this selection e¤ect, the distribution of the duration of price spells, and the real e¤ects of monetary shocks. We …nd that: 1) Sele…

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