This paper proposes two models in which price stickiness arises endogenously even though firms are free to change their prices at zero physical cost. Firms are subject to idiosyncratic and aggregate shocks, and they also face a risk of making errors when they set their prices. In our first...

We analyse the conditions under which an (S,s) rule may be derived and compare these with alternative rules. We consider the case of labour demand with fixed adjustment costs. The (S,s) rule implies a specific ordering of choices: downward adjustment, non-adjustment and upward adjustment with...

This paper presents a model of asymmetric (S,s) pricing. We investigate implications of such a behavior for the effectiveness of the monetary policy. We discuss two types of asymmetric responses to monetary interventions. One is the symmetry in the responses to positive and negative monetary...

This work expounds on implementing an effective dynamic (s,S) policy to solve a liner shipping refueling and speed determination problem under both bunker prices and consumption uncertainties. While solving an optimization model which incorporates a continuous distribution is extremely...

We develop a monetary model that is unique in its ability to deliver a negative correlation between aggregate consumption growth and short-term real interest rates consistent with U.S. data. The essential ingredient to this success is endogenous asset market segmentation permitting the extent of...

Standard macroeconomic forecasting indicators and techniques perform poorly in predicting inflation in the short-run. In contrast, the present paper shows that microeconomic price data placed in an empirical framework rooted in (S,s) pricing theory convey extra information on inflation dynamics....

By placing store-level price data into bivariate Structural VAR models of inflation and relative price asymmetry, this study evaluates the quantitative importance of idiosyncratic pricing shocks in short-run aggregate price change dynamics. Robustly to alternative definitions of the relative...

This paper investigates the aggregate fluctuations in production and demand components when a firm's investment decision takes the form of (S,s) policies. In the field of large-dimensional non-linear dynamical systems, it is a commonly accepted view that a system of coupled non-linear...

This paper proposes a model of endogenous fluctuations in investment. A monopolistic producer has an incentive to invest when the aggregate demand is high. This causes a propagation of investment across sectors. When the investment follows an (S,s) policy, the propagation size can exhibit a...

This paper studies the econometric problems associated with estimation of a stochastic process that is endogenously sampled. Our interest is to infer the law of motion of a discrete-time stochastic process p_t that is observed only at a subset of times t_1, ...,t_n that depend on the outcome of...