Sticky prices play key role in monetary policy responses – ECB paper

ECB in Frankfurt

Price stickiness plays a key role in how different industries react to monetary policy shocks, a working paper published by the European Central Bank finds.

In Sectoral output effects of monetary policy: do sticky prices matter? Lukas Henkel uses data from 205 different industries in the US. He estimates their dynamic output response to monetary policy shocks using a panel vector autoregression framework.

Henkel measures different industries’ degrees of price stickiness by calculating the

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