Is firm pricing state or time dependent? Evidence from U.S. manufacturing

Virgiliu Midrigan

    Research output: Contribution to journalArticle

    Abstract

    If pricing is state dependent, firms are more likely to adjust whenever aggregate and idiosyncratic shocks reinforce each other and trigger desired price changes in the same direction. Using measures of technology shocks derived from production function estimates for fourdigit U.S. manufacturing industries, I find that sectoral inflation rates are more sensitive to negative, as opposed to positive, technology disturbances in periods of higher economy-wide inflation, commodity price increases, and expansionary monetary policy shocks. I argue, using a state-dependent sticky price model that matches salient features of the U.S. microprice data, that these results suggest that pricing is statedependent in U.S. manufacturing.

    Original languageEnglish (US)
    Pages (from-to)643-656
    Number of pages14
    JournalReview of Economics and Statistics
    Volume92
    Issue number3
    DOIs
    StatePublished - Aug 2010

    Fingerprint

    pricing
    manufacturing
    firm
    inflation
    evidence
    production function
    manufacturing industry
    monetary policy
    commodity
    economy
    time
    Manufacturing
    Time-dependent pricing
    State-dependent pricing
    Pricing
    Technology shocks
    Idiosyncratic shocks
    Price changes
    Trigger
    Inflation rate

    ASJC Scopus subject areas

    • Economics and Econometrics
    • Social Sciences (miscellaneous)

    Cite this

    Is firm pricing state or time dependent? Evidence from U.S. manufacturing. / Midrigan, Virgiliu.

    In: Review of Economics and Statistics, Vol. 92, No. 3, 08.2010, p. 643-656.

    Research output: Contribution to journalArticle

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