INFLATION IN POLAND UNDER STATE-DEPENDENT PRICING

• Authors: Baranowski Paweł , Górajski Mariusz , Malaczewski Maciej , Szafranski Grzegorz
• Languages of publication: EN

Abstracts

EN

We investigate the short-term dynamics of the Polish economy by means of a small-scale DSGE model with stochastic menu costs. We compare macroeconomic evidence of price rigidity in a model with the state-dependent Phillips curve to a benchmark model with conventional time-dependent price stickiness. With a moderate 2.3% upper boundary on menu costs the estimated state-dependent pricing model for Poland indicates a median duration of prices about 14 months, whereas the same measure of price stickiness in the time-dependent pricing model is 3 months shorter. The result from the state-dependent pricing model estimated from macro data is closer to, both, micro-price evidence, and surveys on frequency of price changes in Poland. The difference is explained by a selection effect being present in the model with state-dependent price stickiness, only. It yields more intense and impact price adjustment after a monetary policy shock.

Keywords

EN

PRICE STICKINESS; BAYESIAN ESTIMATION; PHILLIPS CURVE; DSGE MODEL; POLAND

• Publisher: Institute of Slovak and World Economics and Institute for Forecasting, Slovak Academy of Sciences
• Journal: Ekonomický časopis (Journal of Economics)
• Year: 2016
• Volume: 64
• Issue: 10
• Pages: 937 – 957

Contributors

author

Baranowski Paweł

• University of Lodz, Faculty of Economics and Sociology, Rewolucji 1905r. Street 41, 90-214 Lodz, Poland

author

Górajski Mariusz

author

Malaczewski Maciej

author

Szafranski Grzegorz