A State-Dependent Model of Intermediate Goods Pricing

37 Pages Posted: 1 Feb 2010

See all articles by Brent Neiman

Brent Neiman

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER)

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Date Written: December 1, 2009

Abstract

Recent analyses of transaction-level datasets have generated new stylized facts on price setting and greatly influenced the empirical macroeconomics literature. This work has uncovered marked heterogeneity in price stickiness, demonstrated that even non-zero price changes do not fully "pass through" cost shocks, and offered evidence of synchronization in the timing of price changes. Further, intrafirm prices have been shown to differ from arm's length prices in each of these characteristics. This paper develops a state-dependent model of intermediate goods pricing, which allows for arm's length and intrafirm transactions, and is capable of generating these empirical pricing patterns.

Keywords: State-Dependent, nominal rigidities, strategic complementarity, intrafirm trade

JEL Classification: E3, F4

Suggested Citation

Neiman, Brent, A State-Dependent Model of Intermediate Goods Pricing (December 1, 2009). MFI Working Paper No. 2010-006, Available at SSRN: https://ssrn.com/abstract=1544579 or http://dx.doi.org/10.2139/ssrn.1544579

Brent Neiman (Contact Author)

University of Chicago - Booth School of Business ( email )

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HOME PAGE: http://faculty.chicagobooth.edu/brent.neiman/index.html

National Bureau of Economic Research (NBER) ( email )

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