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Rebelo, Sérgio; Santana, Miguel; Teles, Pedro - National Bureau of Economic Research - 2024

We study a model where households make decisions according to a dual-process framework widely used in cognitive psychology. System 1 uses effortless heuristics but is susceptible to biases and errors. System 2 uses mental effort to make more accurate decisions. Through their pricing behavior,...

Persistent link: https://www.econbiz.de/10014512068

Sticky Discount Rates

Fukui, Masao; Gormsen, Niels; Huber, Kilian - National Bureau of Economic Research - 2024

We show that firms' nominal required returns to capital (i.e., their discount rates) are sticky with respect to expected inflation. Such nominally sticky discount rates imply that increases in expected inflation directly lower firms' real discount rates and thereby raise real investment. We...

Persistent link: https://www.econbiz.de/10014512092

A Major Shock Makes Prices More Flexible and May Result in a Burst of Inflation or Deflation

Hall, Robert Ernest - National Bureau of Economic Research - 2023

The US and other advanced countries suffered bursts of severe inflation in 2021 and the first half of 2022, followed by declines of inflation later in 2022, in some countries. In times of high volatility of price determinants--cost and productivity--inflation can jump upward and fall downward at...

Persistent link: https://www.econbiz.de/10014247946

Monetary Policy in the Open Economy Revisited : Price Setting and Exchange Rate Flexibility

Devereux, Michael B. - 2000

flexibility is desirable in the presence of real country-specific shocks that require adjustment in relative prices. However, in …

Persistent link: https://www.econbiz.de/10012471102

The Micro-Macro Disconnect of Purchasing Power Parity

Bergin, Paul R. - 2009

This paper reconciles the persistence of aggregate real exchange rates with the faster adjustment of international … stylized facts regarding this puzzle. First, adjustment to purchasing power parity deviations in aggregated data is not just a … slower version of adjustment to the law of one price in microeconomic data, as arbitrage occurs in different markets, in …

Persistent link: https://www.econbiz.de/10012463026

Flexible Prices and Leverage

D’Acunto, Francesco - 2017

time, which we use in a difference-in-differences strategy. Firms' frequency of price adjustment did not change around the …

Persistent link: https://www.econbiz.de/10012455614

A Cognitive View of Policing

Dube, Oeindrila; MacArthur, Sandy Jo; Shah, Anuj K. - National Bureau of Economic Research - 2023

What causes adverse policing outcomes, such as excessive uses of force and unnecessary arrests? Prevailing explanations focus on problematic officers or deficient regulations and oversight. Here, we introduce a new, overlooked perspective. We suggest that the cognitive demands inherent in...

Persistent link: https://www.econbiz.de/10014372408