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Evidence on price adjustment costs in U.S. manufacturing industry

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  • John M. Roberts

Abstract

This paper investigates the degree of rigidity in prices of manufactured products in the United States, conditional on labor costs. The author extends Julio J. Rotemberg's model of quadratic price-adjustment costs and finds that prices are costly to adjust: after a year, about 40 percent of adjustment remains to be completed for aggregate manufacturing, while for some industries the adjustment is twice as slow. But manufacturing prices are less sluggish than prices in the U.S. economy as a whole. Thus, nominal rigidity in other markets, such as those for services or labor, may be important. Copyright 1992 by Oxford University Press.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • John M. Roberts, 1988. "Evidence on price adjustment costs in U.S. manufacturing industry," Working Paper Series / Economic Activity Section 89, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgwe:89
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    Cited by:

    1. Xin Chen & Sean X. Zhou & Youhua (Frank) Chen, 2011. "Integration of Inventory and Pricing Decisions with Costly Price Adjustments," Operations Research, INFORMS, vol. 59(5), pages 1144-1158, October.
    2. Roberts John M., 2005. "How Well Does the New Keynesian Sticky-Price Model Fit the Data?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-39, September.
    3. Harry Bloch & Michael Olive, 2007. "The Speed and Stability of Price Adjustment in Australian Manufacturing," The Economic Record, The Economic Society of Australia, vol. 83(s1), pages 46-56, September.

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