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

    ASJC Scopus subject areas

    • Social Sciences (miscellaneous)
    • Economics and Econometrics

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