This paper re-examines evidence relating mean inflation to cross-sectional inflation asymmetry, and investigates longitudinal asymmetry in disaggregated price series. The asymmetry test used possesses two important characteristics: it has high power, and it is not dominated by outliers. In contrast to Bryan and Cecchetti (1996), the results here suggest that there does exist significant positiv...

Standard macroeconomic forecasting indicators and techniques tend to perform poorly in predicting inflation in the short-run. The present paper shows that microeconomic price data placed in an empirical model rooted in (S,s) pricing theory convey extra information on inflation dynamics. The empirical model designed to capture the deviation between target and actual price, potentially applicable...

This paper derives a concept of aggregate real income for a competitive economy in general equilibrium consisting of heterogeneous infinitely-lived people and relates it to current and future consumption possibilities. An important characteristic of our measure of income, which we call Real Income, is that deflation is carried out using a consumption deflator rather than any price index of outp...

Is Inflation Dead? I n the past few years the United States has enjoyed the unique economic duet of very low unemployment and declining price inflation. For decades, we have come to associate tight labor markets with accelerating wages and prices. But in 1997, the unemployment rate sank below 5 percent and neither wage nor price inflation became a problem. Have our inflation processes fundament...

Using a sample of monthly observations of both a 12-category group and a 203-category group of personal consumption expenditures, we furnish evidence that relative price variability is positively related to both the inflation rate and inflation variability. The relation is robust to oil-price shocks.  2000 Elsevier Science S.A. All rights reserved.

A remarkable feature of the economic performance of industrial countries in the postwar period is that there has been persistent inflation, in clear contrast to the XIX century and the period up to World-War I, which saw significant fluctuations in the general price level around a fairly stable mean. However, when one looks at inflation over the past thirty years, it is striking that, in contra...

An optimising model of price adjustment with missing information is developed where firms choose the speed of price adjustment to minimise the expected loss in disequilibrium. The loss is due to lost profits and the expected cost of failing to coordinate price changes with competitors. Assuming that a higher speed of price adjustment decreases the former and increases the latter, it is shown th...

The Fed kept interest rates low and essentially unchanged during the late 1990s despite a booming economy and record-low unemployment. These interest rates were accommodative by historical standards. Nonetheless, inflation remained low. How did the Fed succeed in sustaining rapid economic growth without fueling inflation and inflationary expectations? In retrospect, it is evident that the produ...

In this paper, we follow the recent empirical literature that has specified reduced-form models for price setting that are closely tied to (S, s)-pricing rules. Our contribution to the literature is twofold. First, we propose an estimator that relaxes distributional assumptions on the unobserved heterogeneity. Second, we use the estimator to examine the prevalence of positive price changes in a...

Given the effects of inflation on the decline of household welfare and its impact on production and investment, identifying the factors affecting it in order to adjust inflation and achieve price stability is necessary. Therefore, using the TVP-FAVAR model, which differentiates the fluctuations in factors affecting inflation, we try to identify the effects of different shocks such as liquidity,...