On Implications of Micro Price Data for Macro Models

48 Pages Posted: 2 Dec 2008

See all articles by Bartosz Maćkowiak

Bartosz Maćkowiak

European Central Bank (ECB)

Frank Smets

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

Date Written: September 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: micro price data, models of price setting, real effects of nominal shocks, sticky prices

JEL Classification: E3, E5

Suggested Citation

Maćkowiak, Bartosz and Smets, Frank, On Implications of Micro Price Data for Macro Models (September 2008). CEPR Discussion Paper No. DP6961. Available at SSRN: https://ssrn.com/abstract=1308032

Bartosz Maćkowiak (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Frank Smets

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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