Pricing under Fairness Concerns: Code and Data

This repository contains the code and data accompanying the paper "Pricing under Fairness Concerns", written by Erik Eyster, Kristof Madarasz, and Pascal Michaillat, and published in the Journal of the European Economic Association in June 2021.

Paper webpage

The paper and its online appendix are available at https://pascalmichaillat.org/8/.

Figure 1

Figure 1 is produced by the MATLAB script figure1.m.

This script calls two Dynare scripts:

• irfFairnessMonetary.mod – Compute the impulse response functions of the New Keynesian model with fairness under monetary shocks
• irfTextbookMonetary.mod – Compute the impulse response functions of the textbook New Keynesian model under monetary shocks

The script then produces the six panels of figure 1:

• figure_1_exogenous_component_of_monetary_policy.pdf – Response of the exogenous component of the monetary-policy rule
• figure_1_inflation_rate.pdf – Response of the inflation rate
• figure_1_perceived_price_markup.pdf – Response of the perceived price markup
• figure_1_actual_price_markup.pdf – Response of the actual price markup
• figure_1_employment.pdf – Response of employment
• figure_1_output.pdf – Response of output

Table 4

Table 4 is produced in the Excel workbook table4.xlsx.

Figure 2

Figure 2 is produced by the MATLAB script figure2.m.

This script calls two Dynare scripts:

• irfFairnessTechnology.mod – Compute the impulse response functions of the New Keynesian model with fairness under technology shocks
• irfTextbookTechnology.mod – Compute the impulse response functions of the textbook New Keynesian model under technology shocks

The script then produces the six panels of figure 2:

• figure_2_technology_level.pdf – Response of the technology level
• figure_2_inflation_rate.pdf – Response of the inflation rate
• figure_2_perceived_price_markup.pdf – Response of the perceived price markup
• figure_2_actual_price_markup.pdf – Response of the actual price markup
• figure_2_employment.pdf – Response of employment
• figure_2_output.pdf – Response of output

Figure 3

Figure 3 is produced by the MATLAB script figure3.m. The script produces the two panels of figure 3:

• figure_3_price_markup.pdf – Long-run Phillips curve in terms of price markup
• figure_3_employment.pdf – Long-run Phillips curve in terms of employment

Figure B.1

Figure B.1 (in online appendix B) is produced by the MATLAB script figureB1.m.

This script calls one Dynare script:

• passthrough.mod – Compute the response of a firm's price to a cost shock

The script then produces the figure and saves it as figure_B1.pdf.

Software

The results were obtained on a Mac running macOS Catalina 10.15.6 with the following software:

• MATLAB R2020a
• Dynare 4.5.7
• Microsoft Excel 16.16.24

License

The content of this repository is licensed under the terms of the MIT License.