tag:blogger.com,1999:blog-4159906646513306121.post2515590561363456456..comments2023-11-19T20:38:50.237-08:00Comments on Economic Logic: Prices are not rigidEconomic Logicianhttp://www.blogger.com/profile/10171296292101248614noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4159906646513306121.post-15149722700637071212008-03-12T18:08:00.000-07:002008-03-12T18:08:00.000-07:00Even if you claim that, in the data, prices have a...Even if you claim that, in the data, prices have a duration of a year, which is really stretching it, no sensible model can give any significant impulse from monetary policy anyway. Looking for significant price rigidity is a lost cause.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4159906646513306121.post-34952467523537239682008-03-12T17:11:00.000-07:002008-03-12T17:11:00.000-07:00Gabriel: The Eichenbaum , Jaimovich and Rebelo pap...Gabriel: The <A HREF="http://ideas.repec.org/p/nbr/nberwo/13829.html" REL="nofollow">Eichenbaum , Jaimovich and Rebelo paper</A> is the last in a series of papers that try to deal with sales and promotions in scanner data. As the others, it highlights that prices change a lot. It also shows that for some goods, they bounce between a few reference prices.<BR/><BR/>The real question is whether the frequency where they reach the various references prices changes, or if they just follow regular cycles. This is much harder to figure out. Many goods have a substantial fraction of their turnover during sale events, so sales are still needed. But one can imagine that if prices need to be higher, such sales are less frequent and more difficult to take advantage of.<BR/><BR/>They argue that the fact that reference prices do not change a lot is evidence of price rigidity. I am not so sure about it.<BR/><BR/>Also, this data does not take into account coupons and how shoppers actually shop. The collected prices are for a particular good in a particular shop. People buy wherever they like to. The prices people actually face is even more flexible than that.Economic Logicianhttps://www.blogger.com/profile/10171296292101248614noreply@blogger.comtag:blogger.com,1999:blog-4159906646513306121.post-79253528834057038892008-03-12T13:28:00.000-07:002008-03-12T13:28:00.000-07:00Seriously now, what about this:http://economistsvi...Seriously now, what about this:<BR/><BR/>http://economistsview.typepad.com/economistsview/2008/03/the-evidence-on.html<BR/><BR/>The point there is that prices are inflexible in a way, a way that's different from what's traditionally assumed. So maybe that's a "third way".Gabriel Mhttps://www.blogger.com/profile/18020403326536585795noreply@blogger.comtag:blogger.com,1999:blog-4159906646513306121.post-73148893630071466942008-03-12T12:30:00.000-07:002008-03-12T12:30:00.000-07:00This comment has been removed by the author.Gabriel Mhttps://www.blogger.com/profile/18020403326536585795noreply@blogger.com