Real and nominal frictions within the firm: How lumpy investment matters for price adjustment.

摘要

In the first chapter, we recognize that at the level of the firm or plant, both capital stocks and prices are typically changed infrequently. We describe a two-dimensional generalized (S,s) environment which replicates both of these facts, and use it to examine the implications of firm-specific factors for the dynamics of output and inflation. Established work on the interaction of real and nominal rigidities shows that the presence of firm-specific capital increases the persistence of inflation and the real effects of monetary shocks, by inducing firms to select smaller price adjustments than they would if capital was freely adjustable. In the two-dimensional generalized (S,s) model, installation costs lead to temporarily firm-specific capital, until the benefits to investment become large enough to warrant payment of installation costs. Capital depreciation and infrequent replacement purchases create endogenous fluctuations in marginal cost which increase firms' willingness to pay menu costs of price adjustment, and the sensitivity of real aggregates to nominal disturbances falls.;In the second chapter, we question the conventional view that sales are unimportant for understanding inflation. Through introduction of a new decomposition, we analyze inflation in terms of changes in permanent prices and cross-sectional changes in sale behavior. We show that at weekly periodicity changes in permanent prices account for as little as 60% of the variation in inflation. At lower frequencies (semiannual in our sample) the contributions of sales to inflation are negligible.;In the third chapter, we take the natural approach to the design of optimal policy rules provided by the recursive methods of Kydland and Prescott (1982) and Marcet and Marimon (1998). We present a recursive systems toolkit for studying optimal policy design and the evaluation of welfare losses in this context, using second-order approximations along the lines of Schmitt-Grohe and Uribe (2004). We apply the approach to a familiar sticky price model, with sticky prices along the lines of Calvo (1982) and a transactions cost motivation for money demand. Our analysis of that familiar model also displays practical ways for researchers to learn about the implications of various frictions for the nature of the optimal policy rule.