Price rigidity is one of the most important issues in macroeconomics. Until recently this topic have been much attention to researchers.
This dissertation analyzed patterns of price rigidity and its relationship to monetary policy effects focusing on 13 Korean manufacturing industries from 1985 to 2012 using monthly and quarterly data.
Main empirical findings of this dissertation are the followings. First, price change shows significant asymmetry in price increase and decrease.
Second, significant differences in price rigidity exist across manufacturing industries.
Third, inflationary process shows high persistence
Fourth, there is positive correlation between inflation volatility and persistence.
Fifth, there is weak negative correlation between price rigidity and inflation rate
Sixth, non-neutrality of monetary policy holds in most of manufacturing industries.
Lastly, price rigidity and monetary policy effects shows weak positive correlation. This result support weakly support the traditional Keynesian non-neutrality hypothesis of money.