Repricing Avalanches

We thank Fernando Alvarez, Jean-Philippe Bouchaud, Mike Golosov, Lars Hansen, Simon Mongey, Harald Uhlig, Mike Woodford, and seminar participants at Columbia's Economics Faculty Lunch Seminar, the BUMP working group at The University of Chicago, the CFM Chair of EconophysiX at Ecole Polytechnique, Bank of Japan, Hitotsubashi University, SED, SAET, Econometric Society World Congress, and the Money & Banking Workshop at The University of Chicago for comments. We also thank Haaris Mateen for excellent research assistance. Part of this research was done during visits by JAS to the Center for Advanced Research in Finance at the University of Tokyo and by MN to Columbia University. MN acknowledges financial support from KAKENHI 18H00831. Portions of this paper were previously circulated under the titles “Self-organization of inflation volatility” and “Menu costs and the volatility of inflation.” The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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