scholarly journals Estimating Models with Dispersed Information

2014 ◽  
Vol 6 (1) ◽  
pp. 1-31 ◽  
Author(s):  
Leonardo Melosi
Keyword(s):  
Common Knowledge ◽  
Dsge Model ◽  
Information Frictions ◽  
Price Stickiness ◽  
Price Changes ◽  
Likelihood Analysis ◽  
Dispersed Information ◽  
Nominal Shocks ◽  
Idiosyncratic Uncertainty

We conduct likelihood evaluation of a DSGE model in which firms have imperfect common knowledge. Imperfect common knowledge is found to be more successful than price stickiness à la Calvo to account for the highly persistent effects of nominal shocks on output and inflation. Our likelihood analysis suggests that firms pay little attention to aggregate nominal conditions. This paper shows that such allocation of attention is plausible because it is optimal for firms with a reasonably small size of information frictions and a size of idiosyncratic uncertainty that is in line with the micro evidence on price changes. (JEL C51, D83, E13, E23, E31)

scholarly journals Firm Uncertainty Cycles and the Propagation of Nominal Shocks

2019 ◽  
Vol 11 (1) ◽  
pp. 276-337 ◽  
Author(s):  
Isaac Baley ◽  
Andrés Blanco
Keyword(s):  
Adjustment Costs ◽  
Individual Characteristics ◽  
Cross Sectional ◽  
Real Effects ◽  
Learning Speed ◽  
Pricing Behavior ◽  
Nominal Shocks ◽  
The Impact ◽  
Idiosyncratic Uncertainty ◽  
Low Uncertainty

We develop a framework to study the impact of idiosyncratic uncertainty on aggregate economic outcomes. Agents learn about individual characteristics, which receive infrequent, large, and persistent shocks. In this environment, idiosyncratic uncertainty moves in cycles, fluctuating between periods of high and low uncertainty; with additional fixed adjustment costs, the frequency and size of agents' actions also fluctuate in cycles. We apply our framework to study pricing behavior and the propagation of nominal shocks. We show, analytically and quantitatively, that idiosyncratic uncertainty cycles amplify the real effects of nominal shocks by generating cross-sectional dispersion in firms' adjustment frequency and in learning speed. (JEL D21, D81, D83, E31, E32, E52)

scholarly journals Inflation Expectations, Learning, and Supermarket Prices: Evidence from Survey Experiments

2017 ◽  
Vol 9 (3) ◽  
pp. 1-35 ◽  
Author(s):  
Alberto Cavallo ◽  
Guillermo Cruces ◽  
Ricardo Perez-Truglia
Keyword(s):  
Inflation Rate ◽  
Inflation Expectations ◽  
Sources Of Information ◽  
Information Frictions ◽  
Rational Inattention ◽  
Price Changes ◽  
Macroeconomic Models ◽  
Cognitive Limitations ◽  
Survey Experiments ◽  
Source Of Information

Information frictions play a central role in the formation of household inflation expectations, but there is no consensus about their origins. We address this question with novel evidence from survey experiments. We document two main findings. First, individuals in low inflation contexts have significantly weaker priors about the inflation rate. This finding suggests that rational inattention may be an important source of information frictions. Second, cognitive limitations also appear to be a source of information frictions: even when information about inflation statistics is available, individuals still place a significant weight on inaccurate sources of information, such as their memories of the price changes of the supermarket products they purchase. We discuss the implications of these findings for macroeconomic models and policymaking. (JEL D83, D84, E31, L11, L81, O11)

scholarly journals The Cross-Sectional Distribution of Price Stickiness Implied by Aggregate Data

2020 ◽  
Vol 102 (1) ◽  
pp. 162-179
Author(s):  
Carlos Carvalho ◽  
Niels Arne Dam ◽  
Jae Won Lee
Keyword(s):  
Empirical Distribution ◽  
Aggregate Data ◽  
Price Dynamics ◽  
Price Stickiness ◽  
Cross Sectional ◽  
Price Changes ◽  
The Cross ◽  
Product Substitutions ◽  
Substantial Heterogeneity ◽  
Extract Information

We provide evidence on three mechanisms that can reconcile frequent individual price changes with sluggish aggregate price dynamics. To that end, we estimate a semistructural model that can extract information about real rigidities and the distribution of price stickiness from aggregate data. Hence, the model can also speak to the debate about the aggregate implications of sales. Our estimates indicate large real rigidities and substantial heterogeneity in price stickiness. Moreover, the cross-sectional distribution of price stickiness implied by aggregate data is in line with an empirical distribution obtained from microprice data that factors out sales and product substitutions.

scholarly journals Over-reaction to Policy Signals, and Central Bank Optimal Communication Policy

2016 ◽  
Vol 5 (3) ◽  
pp. 165-187 ◽  
Author(s):  
Ahmad-Reza Jalali Naini ◽  
Mohammad-Amin Naderian
Keyword(s):  
Public Policy ◽  
Central Bank ◽  
Common Knowledge ◽  
Island Model ◽  
Communication Policy ◽  
Strategic Complementarity ◽  
Economic State ◽  
Dispersed Information

Abstract This paper reviews the theoretical arguments and counter arguments regarding central bank optimal communication policy in an environment with imperfect common knowledge and strategic complementarity. More specifically, the paper discusses the environment in which full transparency is no longer necessarily the superior strategy. Uncertainty about the underlying economic state in the presence of dispersed information is the basis for the emergence of imperfect common knowledge. These issues are further discussed in an augmented Lucas-island model. Full policy transparency in this setting leads to overreliance to central bank public policy signals, resulting in the expectations coordination away from fundamentals - dubbed as over-reaction to central bank announcements. Optimal communication policy in this context entails strategies to limit over-reaction via partial transparency or partial publicity.

Regular Price Stickiness in German Food Retailing

2019 ◽  
Vol 18 (2) ◽  
Author(s):  
Patrick Sebastian Holzer ◽  
Thomas Bittmann
Keyword(s):  
Imperfect Competition ◽  
Price Rigidity ◽  
Private Labels ◽  
Food Retailing ◽  
Menu Costs ◽  
Price Stickiness ◽  
Price Changes ◽  
National Brands ◽  
German Food ◽  
Regular Price

AbstractThe present study investigates the underlying factors of price stickiness in German food retailing using fluid milk as a case study. We distinguish the duration between two actual price changes and two regular price changes as measures for price stickiness. Especially in the case of private labels, the choice of proxy for price rigidity has important implications. If we consider (regular) price changes, private label products are more (less) rigid than national brands. Price rigidity increases in the product’s average price. Prices of low priced private labels are rather flexible. Price adjustment of high priced private labels is similarly sluggish compared to national brands. We rationalize this finding with variable mark-ups under imperfect competition. In line with previous research, we find that price stickiness also depends on product attributes, retail formats, menu costs, psychological price points, and time-varying market conditions.

scholarly journals The Impact of VAT Shock on Iran's Economy; Price Stickiness Sensitivity Analysis with DSGE Model

2021 ◽  
Vol 29 (50) ◽  
pp. 143-177
Author(s):  
Masoud Ghorbani ◽  
Ali Cheshomi ◽  
Mostafa Salimifar ◽  
Azim Nazari
Keyword(s):  
Sensitivity Analysis ◽  
Dsge Model ◽  
Price Stickiness ◽  
The Impact

scholarly journals Optimal Sticky Prices under Rational Inattention

2009 ◽  
Vol 99 (3) ◽  
pp. 769-803 ◽  
Author(s):  
Bartosz Maćkowiak ◽  
Mirko Wiederholt
Keyword(s):  
Information Flow ◽  
Sticky Prices ◽  
Price Setting ◽  
Micro Data ◽  
Rational Inattention ◽  
Absolute Size ◽  
Price Changes ◽  
Real Effects ◽  
Idiosyncratic Shocks ◽  
Nominal Shocks

This paper presents a model in which price setting firms decide what to pay attention to, subject to a constraint on information flow. When idiosyncratic conditions are more variable or more important than aggregate conditions, firms pay more attention to idiosyncratic conditions than to aggregate conditions. When we calibrate the model to match the large average absolute size of price changes observed in micro data, prices react fast and by large amounts to idiosyncratic shocks, but only slowly and by small amounts to nominal shocks. Nominal shocks have strong and persistent real effects. (JEL D21, D83, E31, E52)

Ultrastructural features of prognostic significance in human oral cancer

1992 ◽  
Vol 50 (1) ◽  
pp. 618-619
Author(s):  
Karvita B. Ahluwalia ◽  
Nidhi Sharma
Keyword(s):  
Oral Cancer ◽  
Squamous Cell ◽  
Common Knowledge ◽  
Prognostic Significance ◽  
Growth Control ◽  
Terminal Differentiation ◽  
Squamous Cell Carcinomas ◽  
Effective Therapy ◽  
Invasive Potential ◽  
Biological Behaviour

It is common knowledge that apparently similar tumors often show different responses to therapy. This experience has generated the idea that histologically similar tumors could have biologically distinct behaviour. The development of effective therapy therefore, has the explicit challenge of understanding biological behaviour of a tumor. The question is which parameters in a tumor could relate to its biological behaviour ? It is now recognised that the development of malignancy requires an alteration in the program of terminal differentiation in addition to aberrant growth control. In this study therefore, ultrastructural markers that relate to defective terminal differentiation and possibly invasive potential of cells have been identified in human oral leukoplakias, erythroleukoplakias and squamous cell carcinomas of the tongue.

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