Monetary Economics.

• Position: Program and Working Group Meetings

The NBER's Program on Monetary Economics met in Cambridge on November 14. Organizers Ricardo Reis and Michael Woodford of NBER and Columbia University chose these papers to discuss:

Mark Bils, University of Rochester and NBER; Peter J. Klenow, Stanford University and NBER; and Benjamin A. Malin, Federal Reserve Board, "Reset Price Inflation and the Impact of Monetary Policy Shocks"

Discussant: Jon Steinsson, Columbia University and NBER

"Thomas J. Sargent, New York University and NBER, and Paolo Surico, Bank of England, "Monetary Policies and Low-Frequency Manifestations of the Quantity Theory"

Discussant: James H. Stock, Harvard University and NBER

Olivier Coibion, College of William & Mary, and Yuriy Gorodnichenko, University of California, Berkeley and NBER, "What Can Survey Forecasts Tell Us about Informational Rigidities?"

Discussant: Justin Wolfers, University of Pennsylvania and NBER

Bernardo Guimaraes and Kevin D. Sheedy, London School of Economics, "Sales and Monetary Policy"

Discussant: Ariel Burstein. University of California, Los Angeles and NBER

George-Marios Angeletos, MIT and NBER, and Jennifer La'O, MIT, "Dispersed Information over the Business Cycle: Optimal Fiscal and Monetary Policy"

Discussant: Robert King, Boston University and NBER

Alejandro Justiniano, Federal Reserve Bank of Chicago, and Giorgio E. Primiceri, Northwestern University and NBER, "Potential and Natural Output"

Discussant: Christopher Erceg, Federal Reserve Board

A standard state-dependent pricing model generates little monetary non-neutrality. Two ways of generating more meaningful real effects are time-dependent pricing and strategic complementarities. These mechanisms have telltale implications for the persistence and volatility of "reset price inflation" which is the rate of change of all desired prices (including for goods that have not changed price in the current period). Using the micro data underpinning the CPI, Bils, Klenow, and Malin construct an empirical measure of reset price inflation. They find that time-dependent models imply unrealistically high persistence and stability of reset price inflation. This discrepancy is exacerbated by adding strategic complementarities, even under state-dependent pricing. A state-dependent model with no strategic complementarities aligns most closely with the data.

To detect the quantity theory of money, Sargent and Surico look at scatter plots of filtered time series of inflation and money growth rates and...