Inflation Dynamics and Real Marginal Costs: New Evidence from U.S. Manufacturing Industries

Ivan Petrella; Emiliano Santoro

doi:10.1016/j.jedc.2012.01.009,

Inflation Dynamics and Real Marginal Costs: New Evidence from U.S. Manufacturing Industries

Ivan Petrella, Emiliano Santoro

Økonomisk Institut

11 Citationer (Scopus)

Abstract

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.

Originalsprog	Engelsk
Tidsskrift	Journal of Economic Dynamics and Control
Vol/bind	36
Udgave nummer	5
Sider (fra-til)	779–794
ISSN	0165-1889
DOI	https://doi.org/10.1016/j.jedc.2012.01.009,
Status	Udgivet - maj 2012

Emneord

Det Samfundsvidenskabelige Fakultet
New Keynesian Phillips curve
Aggregation
Sectoral data
Intermediate goods

Adgang til dokumentet

10.1016/j.jedc.2012.01.009,

Citationsformater

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title = "Inflation Dynamics and Real Marginal Costs: New Evidence from U.S. Manufacturing Industries",

abstract = "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.",

keywords = "Faculty of Social Sciences, New Keynesian Phillips curve, Aggregation, Sectoral data, Intermediate goods",

author = "Ivan Petrella and Emiliano Santoro",

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year = "2012",

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T1 - Inflation Dynamics and Real Marginal Costs

T2 - New Evidence from U.S. Manufacturing Industries

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AU - Santoro, Emiliano

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PY - 2012/5

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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,

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VL - 36

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EP - 794

JO - Journal of Economic Dynamics and Control

JF - Journal of Economic Dynamics and Control

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