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Replication data for: Aggregation and the PPP Puzzle in a Sticky-Price Model

Resource Type
  • Carvalho, Carlos
  • Nechio, Fernanda
Publication Date
  • Abstract

    We study the purchasing power parity (PPP) puzzle in a multisector, two-country, sticky-price model. Sectors differ in the extent of price stickiness, leading to heterogeneous sectoral real exchange rate dynamics. Deviations from PPP are more volatile and persistent than in an otherwise identical one-sector world economy with the same average frequency of price changes. Under the empirical distribution of price stickiness of the US economy, the model produces PPP deviations with a half-life of 39 months. We provide a structural interpretation of the approaches found in the empirical literature on aggregation and PPP, and reconcile its apparently conflicting findings. (JEL F31, G31)
  • Is supplement to
    DOI: 10.1257/aer.101.6.2391 (Text)
  • Carvalho, Carlos, and Fernanda Nechio. “Aggregation and the PPP Puzzle in a Sticky-Price Model.” American Economic Review 101, no. 6 (October 2011): 2391–2424.
    • ID: 10.1257/aer.101.6.2391 (DOI)

Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2019-10-11

Carvalho, Carlos; Nechio, Fernanda (2011): Replication data for: Aggregation and the PPP Puzzle in a Sticky-Price Model. Version: 1. ICPSR - Interuniversity Consortium for Political and Social Research. Dataset.