TY  - JOUR
AU  - Altig,David
AU  - Christiano,Lawrence
AU  - Eichenbaum,Martin
AU  - Linde,Jesper
TI  - Firm-Specific Capital, Nominal Rigidities and the Business Cycle
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11034
PY  - 2005
Y2  - January 2005
UR  - http://www.nber.org/papers/w11034
L1  - http://www.nber.org/papers/w11034.pdf
N1  - Author contact info:
David Altig
Federal Reserve Bank of Atlanta
1000 Peachtree St. NE
 Atlanta, GA 30309
Tel: 216-269-9079
E-Mail: David.Altig@atl.frb.org

Lawrence Christiano
Department of Economics
Northwestern University
2001 Sheridan Road
Evanston, IL 60208
Tel: 847/491-8231
Fax: 847/491-7001
E-Mail: l-christiano@northwestern.edu

Martin S. Eichenbaum
Department of Economics
Northwestern University
2003 Sheridan Road
Evanston, IL  60208
Tel: 847/491-8232
Fax: 847/491-7001
E-Mail: eich@northwestern.edu

Jesper Linde
International Finance
Mail Stop 20
Federal Reserve Board
20th and C streets, NW
Washington, D.C. 20551
E-Mail: Jesper.L.Linde@frb.gov
AB  - Macroeconomic and microeconomic data paint conflicting pictures of price behavior. Macroeconomic data suggest that inflation is inertial. Microeconomic data indicate that firms change prices frequently. We formulate and estimate a model which resolves this apparent micro - macro conflict. Our model is consistent with post-war U.S. evidence on inflation inertia even though firms re-optimize prices on average once every 1.5 quarters. The key feature of our model is that capital is firm-specific and pre-determined within a period.
ER  -