Study reveals inflation estimates may be overstated, impacting economic policies.
The paper looks at why estimates of how often prices change differ between big-picture economic studies and surveys of individual businesses. It finds that firms in different industries change prices at different rates. By adjusting a common economic model with real-world data from Australia, the paper shows that the model overestimates how sticky prices really are. This means that some prices might not be as tied to past inflation as previously thought.