%0 Report %1 NBERw10187 %A Golosov, Mikhail %A Lucas, Robert E. %B Working Paper Series %D 2003 %K calibration costs dsge economy ineffectiveness international menu monetary open policy %N 10187 %T Menu Costs and Phillips Curves %U http://www.nber.org/papers/w10187 %X This paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation. Sellers can change price only by incurring a real menu cost.' We calibrate this cost and the variance and autocorrelation of the idiosyncratic shock using a new U.S. data set of individual prices due to Klenow and Kryvtsov. The prediction of the calibrated model for the effects of high inflation on the frequency of price changes accords well with the Israeli evidence obtained by Lach and Tsiddon. The model is also used to conduct numerical experiments on the economy's response to credible and incredible disinflations and other shocks. In none of the simulations we conducted did monetary shocks induce large or persistent real responses.

@techreport{NBERw10187, abstract = {This paper develops a model of a monetary economy in which individual firms are subject to idiosyncratic productivity shocks as well as general inflation. Sellers can change price only by incurring a real menu cost.' We calibrate this cost and the variance and autocorrelation of the idiosyncratic shock using a new U.S. data set of individual prices due to Klenow and Kryvtsov. The prediction of the calibrated model for the effects of high inflation on the frequency of price changes accords well with the Israeli evidence obtained by Lach and Tsiddon. The model is also used to conduct numerical experiments on the economy's response to credible and incredible disinflations and other shocks. In none of the simulations we conducted did monetary shocks induce large or persistent real responses.}, added-at = {2013-03-09T22:13:44.000+0100}, author = {Golosov, Mikhail and Lucas, Robert E.}, biburl = {https://www.bibsonomy.org/bibtex/275112360231370c4f4a54a3e054b6579/jp}, description = {Menu Costs and Phillips Curves}, institution = {National Bureau of Economic Research}, interhash = {f66bbc2e8580182dcef9eda78ea57fb3}, intrahash = {75112360231370c4f4a54a3e054b6579}, keywords = {calibration costs dsge economy ineffectiveness international menu monetary open policy}, month = {December}, number = 10187, series = {Working Paper Series}, timestamp = {2013-03-09T22:13:44.000+0100}, title = {Menu Costs and Phillips Curves}, type = {Working Paper}, url = {http://www.nber.org/papers/w10187}, year = 2003 }