Sticky Prices and Monetary Policy Shocks

  title={Sticky Prices and Monetary Policy Shocks},
  author={Mark Bils and P. Klenow and Oleksiy Kryvtsov},
  journal={The Quarterly review},
  • Mark Bils, P. Klenow, Oleksiy Kryvtsov
  • Published 2003
  • Economics
  • The Quarterly review
  • Models with sticky prices predict that monetary policy changes will affect relative prices and relative quantities in the short run because some prices are more flexible than others. In U.S. micro data, the degree of price stickiness differs dramatically across consumption categories. This study exploits that diversity to ask whether popular measures of monetary shocks (for example, innovations in the federal funds rate) have the predicted effects. The study finds that they do not. Short-run… CONTINUE READING
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