Carlos Carvalho

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Price Selection

Staff Working Paper 2018-44 Carlos Carvalho, Oleksiy Kryvtsov
We propose a simple, model-free way to measure price selection and its impact on inflation. Price selection exists when prices that change in response to aggregate shocks are not representative of the overall population of prices. Due to selection, increases (decreases) in inflation can be amplified because adjusting prices tend to originate from levels far below (above) the average.

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