Menu costs, multi-product firms, and aggregate fluctautions
- 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. JEL Classification: E31, E32
| Author: | Virgiliu Midrigan |
|---|---|
| URN: | urn:nbn:de:hebis:30-38230 |
| Parent Title (German): | Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2007,13 |
| Series (Serial Number): | CFS working paper series (2007, 13) |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2007 |
| Year of first Publication: | 2007 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2007/02/23 |
| Tag: | Multi-Products Firms; State-Dependent Pricing |
| GND Keyword: | Mehrproduktbetrieb; Preisbildung |
| Issue: | January 2006 |
| Page Number: | 62 |
| HeBIS-PPN: | 190112824 |
| Institutes: | Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Licence (German): |  Deutsches Urheberrecht |
