Nonuniform Staggered Prices and Output Persistence



  • I would like to thank Nils Gottfries, Mikael Carlsson, Ulf Söderström, Morten Ravn, seminar participants at Uppsala University, and anonymous referees for valuable comments and suggestions. Financial support from Handelsbanken forskningsstiftelser is gratefully acknowledged. Most of the work on this paper was carried out while I was at the Department of Economics, Uppsala University.


Staggered prices are a fundamental building block of New Keynesian dynamic stochastic general equilibrium models. In the standard model, prices are uniformly staggered, but recent empirical evidence suggests that deviations from uniform staggering are common. This paper analyzes how synchronization of price changes affects the response to monetary policy shocks. I find that even large deviations from uniform staggering have small effects on the response of output. Aggregate dynamics in a model of uniform staggering may serve well as an approximation to a more complicated model with some degree of synchronization in price setting.