Inflation Dynamics and Real Marginal Costs: New Evidence from U.S. Manufacturing Industries
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Inflation Dynamics and Real Marginal Costs : New Evidence from U.S. Manufacturing Industries. / Petrella, Ivan; Santoro, Emiliano.
In: Journal of Economic Dynamics and Control, Vol. 36, No. 5, 2012, p. 779–794.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Inflation Dynamics and Real Marginal Costs
T2 - New Evidence from U.S. Manufacturing Industries
AU - Petrella, Ivan
AU - Santoro, Emiliano
N1 - JEL classification: E31; L60
PY - 2012
Y1 - 2012
N2 - This paper deals with the analysis of price-setting in U.S. manufacturing industries. Recent studies have heavily criticized the ability of the New Keynesian Phillips curve (NKPC) to fit aggregate inflation (see, e.g., Rudd and Whelan, 2006). We challenge this evidence, showing that forward-looking behavior as implied by the New Keynesian model of price-setting is widely supported at the sectoral level. In fact, current and expected future values of the income share of intermediate goods emerge as an effective driver of inflation dynamics. Unlike alternative proxies for the forcing variable, the cost of intermediate goods presents dynamic properties in line with the predictions of the New Keynesian theory.
AB - This paper deals with the analysis of price-setting in U.S. manufacturing industries. Recent studies have heavily criticized the ability of the New Keynesian Phillips curve (NKPC) to fit aggregate inflation (see, e.g., Rudd and Whelan, 2006). We challenge this evidence, showing that forward-looking behavior as implied by the New Keynesian model of price-setting is widely supported at the sectoral level. In fact, current and expected future values of the income share of intermediate goods emerge as an effective driver of inflation dynamics. Unlike alternative proxies for the forcing variable, the cost of intermediate goods presents dynamic properties in line with the predictions of the New Keynesian theory.
KW - Faculty of Social Sciences
KW - New Keynesian Phillips curve
KW - Aggregation
KW - Sectoral data
KW - Intermediate goods
U2 - 10.1016/j.jedc.2012.01.009,
DO - 10.1016/j.jedc.2012.01.009,
M3 - Journal article
VL - 36
SP - 779
EP - 794
JO - Journal of Economic Dynamics and Control
JF - Journal of Economic Dynamics and Control
SN - 0165-1889
IS - 5
ER -
ID: 43213758