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A global assessment of the degree of price stickiness - results from the NBB Business survey

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  • Emmanuel Dhyne

Abstract

In this paper, we estimate the degree of price stickiness in Belgium using the NBB Business survey. Based on our estimates, 19.2% of prices are changed each month. The manufacturing sector and the trade sectors are characterized by a frequency of price changes close to 24.5%. The construction sector is characterized by a frequency of price changes close to 20.5% and B2B service sectors are characterized by a frequency of price changes of almost 9%. Econometric analyses of the determinants of the sectoral frequency of price changes indicate, on the one hand, that cost structure is the main explanatory variable of the sectoral discrepancies. On the other hand, we find that domestic competition does not seem to explain an excess or shortage of price changes at the sectoral level.

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Bibliographic Info

Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

Volume (Year): 52 (2009)
Issue (Month): 1 ()
Pages: 57-77

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Handle: RePEc:bxr:bxrceb:2013/80756

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Keywords: Price rigidity; Frequency of price changes; competition;

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  1. Peter J. Klenow & Oleksiy Kryvtsov, 2005. "State-Dependent or Time-Dependent Pricing: Does it Matter for Recent U.S. Inflation?," NBER Working Papers 11043, National Bureau of Economic Research, Inc.
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  8. Luc Aucremanne & Martine Druant, 2005. "Price-setting behaviour in Belgium - what can be learned from an ad hoc survey?," Working Paper Series 448, European Central Bank.
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  12. Emmanuel Dhyne & Luis J. Alvarez & Herve Le Bihan & Giovanni Veronese & Daniel Dias & Johannes Hoffmann & Nicole Jonker & Patrick Lunnemann & Fabio Rumler & Jouko Vilmunen, 2006. "Price Changes in the Euro Area and the United States: Some Facts from Individual Consumer Price Data," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 171-192, Spring.
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  14. Luc Aucremanne & Emmanuel Dhyne, 2004. "How frequently do prices change? Evidence based on the micro data underlying the Belgian CPI," Working Paper Research 44, National Bank of Belgium.
  15. Emmanuel Dhyne & Jerzy Konieczny & Fabio Rumler & Patrick Sevestre, 2009. "Price rigidity in the euro area - An assessment," European Economy - Economic Papers 380, Directorate General Economic and Monetary Affairs (DG ECFIN), European Commission.
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Cited by:
  1. Andrew B. BERNARD & Emily J. BLANCHARD & Ilke VAN BEVEREN & Hylke Y. VANDENBUSSCHE, 2012. "Carry-Along Trade," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2012020, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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