Abstract
In this paper we demonstrate that the menu-cost model implies that prices adjust asymmetrically to nominal-demand shocks and that the asymmetry is linked to the elasticity of demand as well as menu costs. These implications are tested using manufacturing and retailing panel data for the OECD countries. The empirical results give some support for the menu-cost model.
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Madsen, J.B., Yang, B.Z. Asymmetric price adjustment in a menu-cost model. Zeitschr. f. Nationalökonomie 68, 295–309 (1998). https://doi.org/10.1007/BF01237197
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DOI: https://doi.org/10.1007/BF01237197