The conventional view, as expounded by sticky-price models, is that price adjustment determines the PPP reversion rate …. This study examines the mechanism by which PPP deviations are corrected. Nominal exchange rate adjustment, not price …

shocks have large and persistent price effects, while output effects tend to be moderate. The 2022 natural gas price spike … winter. Counterfactual simulations of an embargo on natural gas imports from Russia indicate similar positive price and …

This paper shows that price rigidity evolves in an economy populated by imperfectly rational agents who experiment with … the level of aggregate demand, as well as on their own price and their neighbor s price. The latter assumption captures … shocks and a high level of local interaction. Instead, the aggregate price level exhibits rigidity, in that it does not fully …