TY  - JOUR
AU  - Gagnon, Etienne
AU  - López-Salido, David
AU  - Vincent, Nicolas
TI  - Individual Price Adjustment along the Extensive Margin
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 18213
PY  - 2012
Y2  - July 2012
DO  - 10.3386/w18213
UR  - http://www.nber.org/papers/w18213
L1  - http://www.nber.org/papers/w18213.pdf
N1  - Author contact info:
Etienne Gagnon
Federal Reserve Board
20th and C Streets, N.W.
Washington, DC 20551
E-Mail: etienne.gagnon@frb.gov

David López-Salido
Division of Monetary Affairs
Federal Reserve Board
20th and C Streets, N.W.
Washington, DC 20551
Tel: 202 452 2566
E-Mail: david.j.lopez-salido@frb.gov

Nicolas Vincent
HEC Montreal
Institute of Applied Economics
3000, chemin de la Côte-Sainte-Catherine
Montréal (Québec), H3T 2A7
Canada
E-Mail: nicolas.vincent@hec.ca
M1  - published as Etienne Gagnon, David López-Salido, Nicolas Vincent. "Individual Price Adjustment along the Extensive Margin," in Daron Acemoglu, Jonathan Parker, and Michael Woodford, editors, "NBER Macroeconomics Annual 2012, Volume 27" University of Chicago Press (2013)

M3  - presented at "27th Annual Conference on Macroeconomics", April 20-21, 2012
AB  - Firms employ a rich variety of pricing strategies whose implications for aggregate price dynamics often diverge. This situation poses a challenge for macroeconomists interested in bridging micro and macro price stickiness. In responding to this challenge, we note that differences in macro price stickiness across pricing mechanisms can often be traced back to price changes that are either triggered or cancelled by shocks. We exploit observed micro price behavior to quantify the importance of this margin of adjustment for the response of inflation to shocks. Across a range of empirical exercises, we find strong evidence that changes in the timing of price adjustments contribute significantly to the flexibility of the aggregate price level.
ER  -