DABUS Carlos Dario
Nominal rigidities, relative prices and skweness
MARÍA ANGELES CARABALLO POU Y CARLOS DABÚS
Documentos de trabajo de centrA
Lugar: Sevilla; Año: 2005 p. 1 - 1
We test out the Ball and Mankiw (BM) statement, which argues that in presence of nominal rigidities, due to the fact that firms face menu costs, inflation and skewness are positively correlated, in two economies with very different inflationary history: Spain and Argentina. Our results show that the predictions of menu costs model hold for the lower inflation period in both countries, even though the mean inflation rate in each period differs strongly across them. In fact, the mean annual inflation rate in Argentina along the low inflation period was around 20%, clearly higher than the inflation rate of Spain in the high inflation period. Nonetheless, in neither of them such approach is suitable at high inflation.