http://www.bis.org/cbhub/list/author/author_64/index.rss Research hub papers by author Allen Tran en http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-01.pdf Reserve Bank of Australia Research Discussion Papers by Adam Cagliarini, Tim Robinson, Allen Tran Reconciling Microeconomic and Macroeconomic Estimates of Price Stickiness 2010-03-30T17:34:59Z This paper attempts to reconcile the high estimates of price stickiness from macroeconomic estimates of a New-Keynesian Phillips Curve (NKPC) with the lower values obtained from surveys of firms' pricing behaviour. This microeconomic evidence also suggests that the frequency with which firms adjust their prices varies across sectors. The paper shows that in the presence of this heterogeneity, estimates of aggregate price stickiness from microeconomic and macroeconomic data should differ. Heterogeneity in firms' pricing decisions, as well as a more realistic production structure, is introduced into an otherwise standard New-Keynesian model. Using a model calibrated with microeconomic pricing survey data for Australia, the paper shows that estimates of the NKPC considerably overstate the true degree of price stickiness and may falsely suggest that some prices are indexed to past inflation. These problems arise because of a type of misspecification and a lack of suitable instruments. Reconciling Microeconomic and Macroeconomic Estimates of Price Stickiness 2010-03-30T17:34:59Z Abstract http://www.rba.gov.au/publications/rdp/2010/2010-01.html Full text http://www.rba.gov.au/publications/rdp/2010/publications/rdp/2010/pdf/rdp2010-01.pdf Allen Tran Adam Cagliarini Tim Robinson Adam Cagliarini, Tim Robinson, Allen Tran 2010-03 Reserve Bank of Australia Research Discussion Papers