Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5059305 | Economics Letters | 2014 | 5 Pages |
Abstract
This paper examines the role of habit formation in a standard state-dependent pricing (SDP) model. Incorporating habit formation helps the SDP model to generate hump-shaped and more persistent output responses under a monetary shock. More importantly, incorporating habit formation causes dramatic changes in firm-level pricing behaviors and, as a result, the aggregate price index.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Phuong V. Ngo,