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BEGIN:VEVENT
UID:bf3a8d02570b5b7d0d6e235bd7d0e97d
CATEGORIES:Seminars
CREATED:20161216T181341
SUMMARY:Lunch Seminar: Francesco Lippi - EIEF
DESCRIPTION;ENCODING=QUOTED-PRINTABLE:Price plans and the real effects of monetary policy \nAbstract:\nTransitory
  price changes are prominent in the data but do not fit neatly in standard 
 sticky price models. We present a model where a firm chooses a “price plan”
 , namely a set of 2 prices each of which can be freely posted at each momen
 t. While price changes between prices within the plan are free, the plan ca
 n be changed only subject to a fixed menu cost. This setup generates a pers
 istent “reference”\n price level and short lived deviations from it, as see
 n in many datasets. The model also produces a decreasing hazard function fo
 r price changes, a feature that appears in several datasets. We analyticall
 y solve for the optimal policy of a firm, and for the cumulative impulse re
 sponse function of output to a once and for all monetary shock. We compare 
 the economy with the 2-price plan to a menu-cost economy (i.e. a plan with 
 1 price) featuring the same number of persistent price changes. We show tha
 t, for a small monetary shock, the introduction of a plan with 2 prices yie
 lds a cumulative output response that is 1/3 of the one produced by the men
 u cost economy. The smaller real effect of the monetary shock is due to the
  flexibility delivered by the temporary price changes which are used by the
  firms to respond to the aggregate shock.\n
DTSTAMP:20260404T021240Z
DTSTART:20151123T130000Z
DTEND:20151123T140000Z
SEQUENCE:0
TRANSP:OPAQUE
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