We document a new stylized fact for the life-cycle behavior of consumer prices: relative to a narrowly defined set of competing products, the price of individual products tends to fall over the product lifetime. This holds true for more than 90% of the expenditure items underlying the U.K....

We present a sticky-price model incorporating heterogeneous firms and systematic firm-level productivity trends. Aggregating the model in closed form, we show that it delivers radically different predictions for the optimal inflation rate than canonical sticky price models featuring homogenous...

The present paper shows that product-specific regional price dispersion usually causes the Country-Product-Dummy (CPD) method to be biased. In cases where it is not, this index number method is still inefficient and inference is invalid. In view of this, a nonlinear generalization of the CPD...