{"title":"The roles of price points and menu costs in price rigidity","authors":"Edward S. Knotek II","doi":"10.1016/j.jmoneco.2024.103559","DOIUrl":null,"url":null,"abstract":"<div><p>Macroeconomic models often generate nominal price rigidity via menu costs. In scanner databases, (1) price points, embodied in nine-ending prices, account for two-thirds of prices; (2) at the conclusion of sales, post-sale prices return to their pre-sale levels more than three-fourths of the time; and (3) such memory around sales is stronger if the pre-sale price was a price point. Extending a canonical menu cost model to allow for price points, I estimate an incentive to set nine-ending prices two orders of magnitude larger than the menu costs. The choice of a mechanism for price rigidity matters for aggregate dynamics.</p></div>","PeriodicalId":48407,"journal":{"name":"Journal of Monetary Economics","volume":"145 ","pages":"Article 103559"},"PeriodicalIF":4.3000,"publicationDate":"2024-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Monetary Economics","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0304393224000126","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
Macroeconomic models often generate nominal price rigidity via menu costs. In scanner databases, (1) price points, embodied in nine-ending prices, account for two-thirds of prices; (2) at the conclusion of sales, post-sale prices return to their pre-sale levels more than three-fourths of the time; and (3) such memory around sales is stronger if the pre-sale price was a price point. Extending a canonical menu cost model to allow for price points, I estimate an incentive to set nine-ending prices two orders of magnitude larger than the menu costs. The choice of a mechanism for price rigidity matters for aggregate dynamics.
期刊介绍：
The profession has witnessed over the past twenty years a remarkable expansion of research activities bearing on problems in the broader field of monetary economics. The strong interest in monetary analysis has been increasingly matched in recent years by the growing attention to the working and structure of financial institutions. The role of various institutional arrangements, the consequences of specific changes in banking structure and the welfare aspects of structural policies have attracted an increasing interest in the profession. There has also been a growing attention to the operation of credit markets and to various aspects in the behavior of rates of return on assets. The Journal of Monetary Economics provides a specialized forum for the publication of this research.
京公网安备 11010802042870号
京ICP备2023020795号-1
分享
求助内容：
应助结果提醒方式：
扫码关注我们
