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12 Results

Inventories and Real Rigidities in New Keynesian Business Cycle Models

Staff Working Paper 2009-9 Oleksiy Kryvtsov, Virgiliu Midrigan
Kryvtsov and Midrigan (2008) study the behavior of inventories in an economy with menu costs, fixed ordering costs and the possibility of stock-outs. This paper extends their analysis to a richer setting that is capable of more closely accounting for the dynamics of the US business cycle.

Inventories, Markups, and Real Rigidities in Menu Cost Models

Staff Working Paper 2009-6 Oleksiy Kryvtsov, Virgiliu Midrigan
Real rigidities that limit the responsiveness of real marginal cost to output are a key ingredient of sticky price models necessary to account for the dynamics of output and inflation. We argue here, in the spirit of Bils and Kahn (2000), that the behavior of marginal cost over the cycle is directly related to that of inventories, data on which is readily available.
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