Research
The Elusive Costs of Inflation: Price Dispersion during the U.S. Great Inflation
Emi Nakamura, Patrick Sun, Jón Steinsson, and Daniel Villar
Quarterly Journal of Economics, 133(4), 1933-1980, November 2018.
Evidence on the size of price changes indicates that price dispersion was no higher during the Great Inflation than in recent years. This suggests that the standard New Keynesian analysis of the welfare costs of inflation is wrong and its implications for the optimal inflation rate need to be reassessed.
Appendix -- Slides -- ELI Concordance -- Replication Material
Informational Rigidities and the Stickiness of Temporary Sales
Eric Anderson, Benjamin Malin, Emi Nakamura, Duncan Simester, and Jón Steinsson
Journal of Monetary Economics, 90, 64-83, October 2017.
While most price changes are temporary sales, retail prices respond to a wholesale cost increase entirely through the regular price. Temporary sales are governed by complex contingent contracts between manufacturers and retailers, determined substantially in advance.
Price Rigidity: Microeconomic Evidence and Macroeconomic Implications
Emi Nakamura and Jón Steinsson
Annual Review of Economics, 5, 133-163, 2013.
Sluggish price adjustment is a leading explanation for the large effects of demand shocks on output and, in particular, the effects of monetary policy on output. But simple statistics such as the frequency of price change can be a misleading guide to the sluggishness of the aggregate price level.
Lost in Transit: Product Replacement Bias and Pricing to Market
Emi Nakamura and Jón Steinsson
American Economic Review, 102(7), 3277-3316, December 2012.
40% of products in U.S. micro price data are replaced before they have a single price change. Price indexes based on price changes for identical items will thus suffer from “product replacement bias.” Correcting for this bias substantially increases exchange rate pass-through.
Price Setting in Forward-Looking Customer Markets
Emi Nakamura and Jón Steinsson
Journal of Monetary Economics, 58(3), 220-233, April 2011.
If households form habits in individual goods, firms want to commit to low prices in the future but gouge consumers in the present. In this setting, firms benefit from “committing to a sticky price.”
Monetary Non-Neutrality in a Multi-Sector Menu Cost Model
Emi Nakamura and Jón Steinsson
Quarterly Journal of Economics, 125(3), 961-1013, August 2010.
Incorporating heterogeneity in the price rigidity increases the degree of monetary non-neutrality in a menu cost model by a factor of three. Incorporating intermediate inputs adds another factor of three. With these additions, the menu cost model can generate substantial monetary non-neutrality
Five Facts About Prices: A Reevaluation of Menu Cost Models
Emi Nakamura and Jón Steinsson
Quarterly Journal of Economics, 123(4), 1415-1464, November 2008.
The median frequency of non-sale price changes is only half of what it is including sales. The median implied duration of regular prices is between 8 and 11 months.
Frequency of Price Change by ELI: ELI table (PDF) -- ELI table (Excel)
Supplementary Material: More Facts About Prices
Tables in Excel: Tables from Paper -- Tables from Supplement (Excel)