Replication data for: Menu Costs, Aggregate Fluctuations, and Large Shocks

Principal Investigator(s): View help for Principal Investigator(s) Peter Karadi; Adam Reiff

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Project Citation:

Karadi, Peter, and Reiff, Adam. Replication data for: Menu Costs, Aggregate Fluctuations, and Large Shocks. Nashville, TN: American Economic Association [publisher], 2019. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-12-07. https://doi.org/10.3886/E116411V1

Project Description

Summary: We document that the aggregate price level responds flexibly and asymmetrically to large positive and negative value-added tax changes. We present a price-setting model with menu costs, trend inflation, and fat-tailed product-level shocks that is consistent with these observations. The model predicts a flexible price-level response to standard monetary policy shocks because it anticipates a large number of firms on the verge of price adjustment and far from their optimal prices when the shock hits.

Scope of Project

JEL Classification:
      E31 Price Level; Inflation; Deflation
      E32 Business Fluctuations; Cycles
      E52 Monetary Policy
      E62 Fiscal Policy
      H25 Business Taxes and Subsidies including sales and value-added (VAT)

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Published Versions

V1 [2019-12-07]

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