Nuremberg Research Seminar in Economics on 7 June 2023 – Room LG 0.423

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You are invited to join the weekly Nuremberg Research Seminar in Economics on  7 June 2023, from 13.15 to 14.45 pm. The seminar will be held in room LG 0.423. Klaus Adam (University of Mannheim) will be talking about „Inflation Distorts Relative Prices: Theory and Evidence“.

More information can be found here:

Using a novel identification approach derived from sticky price theories with time or state-dependent adjustment frictions, we empirically identify the effect of inflation on relative price distortions. Our approach can be directly applied to micro price data, does not rely on estimating the gap between actual and flexible prices, and only assumes stationarity of unobserved shocks. Using U.K. CPI micro price data, we document that suboptimally high (or low) inflation is associated with distortions in relative prices that are highly statistically significant. At the aggregate level, fuctuations in inefficient price dispersion are sizable and covary positively with aggregate inflation. In contrast, overall price dispersion fails to covary with inflation because it is mainly driven by trends in the dispersion of flexible prices.