Discussion Paper

No. 2010-19 | July 15, 2010
(S,s) Pricing: Does the Heterogeneity Wipe Out the Asymmetry on Micro Level?

Abstract

This paper presents a model of asymmetric (S,s) pricing. We investigate whether the asymmetry on micro level is carried over on macro level and what is the role of agent heterogeneity in the process. We look at two kinds of asymmetries: (i) asymmetric output responses monetary shocks and (ii) asymmetric responses to shocks during different phases of business cycle. We conclude that the first type of asymmetry can be attributed to the differences in adjustment bands and that heterogeneity softens this effect. The second type of asymmetry is the result of pricing behavior, thus of agent heterogeneity itself.

JEL Classification

E37 E31

Cite As

Zakaria Babutsidze (2010). (S,s) Pricing: Does the Heterogeneity Wipe Out the Asymmetry on Micro Level?. Economics Discussion Papers, No 2010-19, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2010-19

Assessment



Comments and Questions


Anonymous - Referee Report 1
November 18, 2010 - 10:27

See attached file


Anonymous - Referee Report 2
November 23, 2010 - 08:45

See attached file


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