Staggered price setting, translog preferences, and endogenous persistence

This paper generates persistent real effects of a monetary disturbance in t he context of staggered price setters. The model combines two related and r einforcing features: a translog demand structure and a particular input-out put production structure, These features offer a rationale why a firm, when computing its own optimal contract price, is influenced by the prices set in other overlapping contracts. Practically, the two features interact in a positive manner and provide a way to generate significant endogenous persi stence. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classificat ion: F32; E52.