Stylized (Arte) Facts on Sectoral Inflation

Research on disaggregate price indices has found that sectoral shocks generate the bulk of sectoral inflation variance, but no persistence. Aggregate shocks, by contrast, are the root of sectoral inflation persistence, but have negligible relative variance. We argue that these findings are largely an artefact of using overly simple factor models to characterize inflation. Sectoral inflation series are subject to particular features such as sales and item substitutions. In factor models, these blow up the variance of sectoral shocks, while reducing their persistence. Controlling for such effects, we find that inflation variance is driven by both aggregate and sectoral shocks. Sectoral shocks, too, generate substantial inflation persistence. Both findings contrast sharply with earlier evidence from factor models. However, these results align well with recent micro evidence. This has implications for the foundations of price stickiness, and provide quantitative inputs for calibrating models with sectoral heterogeneity

Why are Prices Sticky? Evidence from Business Survey Data

This paper offers new insights on the price setting behaviour of German retail firms using a novel dataset that consists of a large panel of monthly business surveys from 1991-2006. The firm-level data allows matching changes in firms' prices to several other firm-characteristics. Moreover, information on price expectations allow analyzing the determinants of price updating. Using univariate and bivariate ordered probit specifications, empirical menu cost models are estimated relating the probability of price adjustment and price updating, respectively, to both time- and state- dependent variables. First, results suggest an important role for state-dependence; changes in the macroeconomic and institutional environment as well as firm-specific factors are significantly related to the timing of price adjustment. These findings imply that price setting models should endogenize the timing of price adjustment in order to generate realistic predictions concerning the transmission of monetary policy. Second, an analysis of price expectations yields similar results providing evidence in favour of state-dependent sticky plan models. Third, intermediate input cost changes are among the most important determinants of price adjustment suggesting that pricing models should explicitly incorporate price setting at different production stages. However, the results show that adjustment to input cost changes takes time indicating "additional stickiness" at the last stage of processing

The determinants of price rigidity in the UK: Analysis of the CPI and PPI microdata and application to macrodata modelling

This paper investigates price rigidity in UK consumer and producer markets, by estimating the hazard functions of price changes in microdata which are then used in macrodata modelling. We explore the mechanism of price setting using survival analysis in order to see what factors drive the observed price rigidity. We find significant effects of macroeconomic variables such as inflation and output, which should be purged off before calibrating any macroeconomic models. The microdata findings are then used to estimate and simulate a heterogeneous price setting model (generalised Calvo and Taylor), which improves the performance in matching macrodata persistence

The Cross-Sectional Distribution of Price Stickiness Implied by Aggregate Data

Using only aggregate data as observables, we estimate multisector sticky-price models for twelve countries, allowing the degree of price stickiness to vary across sectors. We use a specification that allows us to extract information about the underlying cross-sectional distribution from aggregate data. Identification is possible because sectors play different roles in determining the response of aggregate variables to shocks at different frequencies: sectors where prices are more sticky are relatively more important in determining the low-frequency response. We find that the inferred distributions of price stickiness conform quite well with empirical distributions constructed from the available microeconomic evidence on price setting. We then explore our Bayesian approach to combine the aggregate time-series data with the microeconomic information on the distributions of price rigidity, and re-estimate the models for the United States, Denmark, and Japan. Our results show that allowing for this type of heterogeneity is critically important to understanding the joint dynamics of output and prices, and it constitutes a step toward reconciling the extent of nominal price rigidity implied by aggregate data with the evidence from price micro data

The Great Divergence: A Network Approach

We present a multi-country theory of economic growth in which countries are connected by a network of mutual knowledge exchange. Growth is generated through human capital accumulation and knowledge externalities. The available knowledge in any country depends on its connections to the rest of the world and on the human capital of the countries it is exchanging knowledge with. We show how the diffusion of knowledge through the world explains the evolution of global income inequality. It generates a Great Divergence, that is increasing world inequality after the take-off of the forerunners of the industrial revolution, followed by a Great Convergence, that is decreasing world inequality after the take-off of the latecomers of the industrial revolution. Knowledge diffusion through a Small World network produces an extraordinary diversity of individual growth experiences of initially identical countries including differentiated take-offs to growth as well as overtaking and falling behind in the course of world development

Serine residue 115 of MAPK-activated protein kinase MK5 is crucial for its PKA-regulated nuclear export and biological function

The mitogen-activated protein kinase-activated protein kinase-5 (MK5) resides predominantly in the nucleus of resting cells, but p38MAPK, extracellular signal-regulated kinases-3 and -4 (ERK3 and ERK4), and protein kinase A (PKA) induce nucleocytoplasmic redistribution of MK5. The mechanism by which PKA causes nuclear export remains unsolved. In the study reported here we demonstrated that Ser-115 is an in vitro PKA phosphoacceptor site, and that PKA, but not p38MAPK, ERK3 or ERK4, is unable to redistribute MK5 S115A to the cytoplasm. However, the phosphomimicking MK5 S115D mutant resides in the cytoplasm in untreated cells. While p38MAPK, ERK3 and ERK4 fail to trigger nuclear export of the kinase dead T182A and K51E MK5 mutants, S115D/T182A and K51E/S115D mutants were able to enter the cytoplasm of resting cells. Finally, we demonstrated that mutations in Ser-115 affect the biological properties of MK5. Taken together, our results suggest that Ser-115 plays an essential role in PKA-regulated nuclear export of MK5, and that it also may regulate the biological functions of MK5