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In the U.S. and Europe, prices change at least once a year. Yet nominal macro shocks seem to have real effects lasting well beyond a year. "Sticky information" models, as posited by Mankiw and Reis (2002), Sims (2003), and Woodford (2003), can reconcile micro flexibility with macro rigidity. We simulate a sticky information model in which price setters(More)
House for their valuable comments. The views expressed herein are solely those of the author and do not necessarily reflect the views of the Federal Reserve Bank of Kansas City or the Federal Reserve System. Abstract This paper provides a framework for direct analysis of the underlying price adjustment costs in an industry. A dynamic programming problem is(More)
Models of heterogenous firms making decisions about entering foreign markets in the face of sunk entry costs have become standard tools for understanding the firm exporting decision. These models induce a discrete choice between exporting and only serving the domestic market. In this paper we study how well these discrete choice models account for the data(More)
Winter Meeting for helpful comments. Phaneuf acknowledges financial support from SSHRC and FCAR and the research assistance of Mohamed Gammoudi. The views expressed in the paper are those of the authors and do not necessarily represent the views of the Federal Reserve Bank of Kansas City or the Federal Reserve System. Abstract This paper seeks to understand(More)