On Implications of Micro Price Data for Macro Models

55 Pages Posted: 19 Nov 2008  

Bartosz Mackowiak

Humboldt University of Berlin - Faculty of Economics

Frank Smets

European Central Bank (ECB); KU Leuven - Center for Economic Studies

Date Written: November 12, 2008

Abstract

We review the recent literature that studies new, detailed micro data on prices. We discuss implications of the new micro data for macro models. We argue that the new micro data are helpful for macro models, but not decisive. There is no simple mapping from the frequency of price changes in micro data to impulse responses of prices and quantities to shocks. We discuss ideas that promise to deliver macro models matching the impulse responses seen in macro data while being broadly in line with micro data.

Keywords: Sticky prices, micro price data, models of price setting, real effects of nominal shocks

JEL Classification: E3, E5

Suggested Citation

Mackowiak, Bartosz and Smets, Frank, On Implications of Micro Price Data for Macro Models (November 12, 2008). ECB Working Paper No. 960. Available at SSRN: https://ssrn.com/abstract=1291169

Bartosz Mackowiak

Humboldt University of Berlin - Faculty of Economics ( email )

Spandauer Strasse 1
Berlin
Germany

Frank Smets (Contact Author)

European Central Bank (ECB) ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany
+49 69 1344 6550 (Phone)
+49 69 1344 6575 (Fax)

KU Leuven - Center for Economic Studies ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

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