The views expressed herein are those of the authors and should not be interpreted as reflecting those of the Banque de France. We thank Laurent Baudry for his excellent research assistance. We are grateful to Peter Klenow for providing us with detailed sets of results from Bils and Klenow (2004). We thank Pok-sang Lam (the Editor) and two anonymous referees for many very helpful remarks and suggestions. We also are grateful to seminar participants at University Paris I, Fabrice Collard, and Stéphane Gregoir for comments on an earlier draft.
Price Stickiness and Sectoral Inflation Persistence: Additional Evidence
Article first published online: 19 SEP 2012
© 2012 The Ohio State University
Journal of Money, Credit and Banking
Volume 44, Issue 7, pages 1427–1442, October 2012
How to Cite
LE BIHAN, H. and MATHERON, J. (2012), Price Stickiness and Sectoral Inflation Persistence: Additional Evidence. Journal of Money, Credit and Banking, 44: 1427–1442. doi: 10.1111/j.1538-4616.2012.00538.x
- Issue published online: 19 SEP 2012
- Article first published online: 19 SEP 2012
- Received December 22, 2008; and accepted in revised form November 15, 2011.
- Sticky prices;
- Inflation persistence
In this paper, using U.S. as well as French sectoral data and indicators of price rigidity, we reexamine the (lack of) relation between price stickiness and inflation persistence. This has recently been put forward by Bils and Klenow (2004) as evidence against time-dependent price setting models. We obtain that, when filtering out sector-specific shocks along the lines of Boivin, Giannoni, and Mihov (2009), and allowing for an alternative assumption on the marginal cost process, the case against the time-dependent Calvo model is substantially weakened.