Anastasiia Antonova, Aix-Marseille University (Job Market Seminar)

"State-dependent pricing and cost-push inflation in a production network economy"

Abstract

Post-Covid inflation pressures call for quantifying the cost-push effect of large sectoral shocks within observed inflation. This paper examines how state-dependent pricing shapes cost-push inflation in a New-Keynesian Production Network model, extended with tractable state-dependent price rigidity varying with shock size. I find that state dependence is particularly strong in sectors with inherently higher price rigidity, affecting both the magnitude and direction of the cost-push effect, especially during crises. Overall, state dependence more than doubles the contribution of cost-push factors to observed inflation.

Contact person: Søren Hove Ravn