are price decreases. (3) The frequency of price increases covaries strongly with inflation, whereas the frequency of price decreases and the size of price increases and price decreases do not. (4) The frequency of price change is highly seasonal: it is highest in the first quarter and then declines. (5) We find no evidence of upwardsloping hazard functions of price changes for individual products. We show that the first, second, and third facts are consistent with a benchmark menu-cost model, whereas the fourth and fifth facts are not.

/pdf/five-facts-about-prices-a-reevaluation-of-menu-cost-models-35l383bzoq.pdf

Five Facts about Prices: A Reevaluation of Menu Cost Models

The ability of a two-sector model to quantify the contribution of the housing market to business fluctuations is investigated using U.S. data and Bayesian methods. The estimated model, which contains nominal and real rigidities and collateral constraints, displays the following features: first, a large fraction of the upward trend in real housing prices over the last 40 years can be accounted for by slow technological progress in the housing sector; second, residential investment and housing prices are very sensitive to monetary policy and housing demand shocks; third, the wealth effects from housing on consumption are positive and significant, and have become more important over time. The structural nature of the model allows identifying and quantifying the sources of fluctuations in house prices and residential investment and measuring the contribution of housing booms and busts to business cycles.

/pdf/housing-market-spillovers-evidence-from-an-estimated-dsge-cw32z51gvs.pdf

Housing Market Spillovers: Evidence from an Estimated DSGE Model

Cet article analyse les relations conceptuelles (imprecises) de la vulnerabilite, de la resilience et de la capacite d’adaptation aux changements climatiques selon le systeme socio-ecologique (socio-ecologigal systems – SES) afin de comprendre et anticiper le comportement des composantes sociales et ecologiques du systeme. Une serie de questions est proposee par l’auteur sur la specification de ces termes afin de developper une structure conceptuelle qui inclut les dimensions naturelles et so...

Linkages between vulnerability, resilience, and adaptive capacity

Social Vulnerability to Environmental Hazards

Most central banks perceive a trade-off between stabilizing inflation and stabilizing the gap between output and desired output. However, the standard new Keynesian framework implies no such trade-off. In that framework, stabilizing inflation is equivalent to stabilizing the welfare-relevant output gap. In this paper, we argue that this property of the new Keynesian framework, which we call the divine coincidence, is due to a special feature of the model: the absence of non-trivial real imperfections. We focus on one such real imperfection, namely, real wage rigidities. When the baseline new Keynesian model is extended to allow for real wage rigidities, the divine coincidence disappears, and central banks indeed face a trade-off between stabilizing inflation and stabilizing the welfare-relevant output gap. We show that not only does the extended model have more realistic normative implications, but it also has appealing positive properties. In particular, it provides a natural interpretation for the dynamic inflation-unemployment relation found in the data.

/pdf/real-wage-rigidities-and-the-new-keynesian-model-zj6s1oewfu.pdf

Real Wage Rigidities and the New Keynesian Model

/pdf/sticky-prices-in-the-euro-area-a-summary-of-new-micro-aip9uw6iuz.pdf

Sticky prices in the euro area: a summary of new micro

Prices of goods and services do not adjust immediately in response to changing demand and supply conditions. This paper characterizes the average frequency and size of price changes in the euro area and its member countries, investigates the determinants of the probability of price changes, and compares the evidence for the euro area with available U.S. results. The facts documented in this paper are based on evidence from individual price data recorded at the store level in all euro area countries except Ireland and Greece: that is in datasets covering Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Portugal, and Spain, which together account for around 97 percent of euro area GDP. The data used are the monthly price records underlying the computation of national Consumer Price Indices and Harmonized Consumer Price Indices. These data cover a large number of products selected on the basis of extensive Household Budget Surveys.

https://pubs.aeaweb.org/doi/10.1257/jep.20.2.171

Price Changes in the Euro Area and the United States: Some Facts from Individual Consumer Price Data

This paper documents patterns of price setting at the retail level in the euro area, summarized in six stylized facts. First, the average euro area monthly frequency of price adjustment is 15 p.c., compared to about 25 p.c. in the US. Second, the frequency of price changes is characterized by substantial cross product heterogeneity - prices of oil and unprocessed food products change very often, while price adjustments are less frequent for processed food, non energy industrial goods and services. Third, cross country heterogeneity exists but is less pronounced. Fourth, price decreases are not uncommon. Fifth, price increases and decreases are sizeable compared to aggregate and sectoral inflation rates. Sixth, price changes are not highly synchronized across retailers. Moreover, the frequency of price changes in the euro area is related to several factors, such as seasonality, outlet type, indirect taxation, pricing practices as well as aggregate or product specific inflation.

Price setting in the euro area: Some stylized facts from Individual Consumer Price Data. NBB Working Paper Nr.74, September 2005

This paper summarises the vast evidence on micro price-setting recently obtained for euro area countries. We consider studies with micro data on consumer and producer prices, as well as survey information. The main findings are: (1) prices in the euro area are sticky and stickier than in the US; (2) downward price rigidity is only slightly more marked than upward price rigidity; (3) heterogeneity and asymmetries are observed in price-setting; and (4) the relevance of theories that explain price stickiness, such as implicit or explicit contracts, marginal costs, and coordination failure, is confirmed, whereas menu costs, pricing thresholds, and costly information explanations are judged much less relevant by firms. (JEL: C25, D40, E31)

/pdf/sticky-prices-in-the-euro-area-a-summary-of-new-micro-4cajwyc098.pdf

Sticky Prices in the Euro Area: A Summary of New Micro-Evidence

https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosOcasionales/09/Fic/do0904e.pdf

Luis J. Álvarez

Papers

Sticky prices in the euro area: a summary of new micro

Price Changes in the Euro Area and the United States: Some Facts from Individual Consumer Price Data

Price setting in the euro area: Some stylized facts from Individual Consumer Price Data. NBB Working Paper Nr.74, September 2005

Sticky Prices in the Euro Area: A Summary of New Micro-Evidence

The impact of oil price changes on Spanish and euro area consumer price inflation