美联储-菜单成本经济中的非线性通货膨胀动力学（英）-2024.1-69页_921kb

Paper Summary

Title: Nonlinear Inflation Dynamics in Menu Cost Economies
Authors: Andres Blanco, Corina Boar, Callum Jones, Virgiliu Midrigan
Year: 2024

The paper addresses the limitations of standard menu cost models in capturing the extent to which price change frequency increases with inflation. Key findings include:

• Standard menu cost models, calibrated to match micro-price data, fail to reproduce the nonlinear relationship between inflation and the fraction of price changes observed in data. They also predict implausibly large menu costs (8.3% of sales) and productivity losses from misallocation.

• The authors extend the multi-product menu cost model in two ways:

  1. Products sold by a firm are imperfect substitutes.
  2. Strategic complementarities arise at the firm rather than product level, reducing misallocation losses.

• This extension allows the model to better capture the extensive margin of price changes, especially during high inflation. The model requires smaller menu costs (approximately 1% of sales) and shows that the fraction of price changes responds strongly to large shocks.

• The model's implications for monetary policy are nonlinear, with output responses being more sensitive to small shocks than large ones. The Phillips curve is highly nonlinear, becoming vertical at higher inflation rates.

The study provides a more plausible framework for understanding inflation dynamics under large aggregate shocks, reconciling evidence from micro-price data and addressing gaps in existing models.