Guerrieri, Veronica; Hartley, Daniel; Hurst, Erik - Federal Reserve Bank of Cleveland - 2010
products, we explore the rigidity of bank retail interest rates. We study periods over which retail interest rates remain fixed … analysis and calculate the probability that a bank will change a given deposit or loan rate under various conditions …. Consistent with a nonconvex adjustment costs theory, we find that the probability of a bank changing its retail rate is initially …