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Price stickiness in Portugal evidence from survey data

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  • Fernando Martins

Abstract

This paper analyses the results of a survey conducted on a sample of Portuguese firms, with the main purpose of investigating their price setting behaviour. The evidence points to a considerable degree of price stickiness: most firms do not change prices more than once a year; time lags in price reactions to shocks are significant; and more than half of the firms follow time-dependent price reviewing and build their price decisions disregarding any indication of future economic developments. Implicit contracts between firms and their customers under which the former pledge to stabilise their prices as a way to increase customers' loyalty are apparently the main reason preventing firms from changing their prices more frequently. Copyright © 2009 John Wiley & Sons, Ltd.

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  • Fernando Martins, 2010. "Price stickiness in Portugal evidence from survey data," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(2-3), pages 123-134.
    • Handle: RePEc:wly:mgtdec:v:31:y:2010:i:2-3:p:123-134
    DOI: 10.1002/mde.1483
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    7. Silvia Fabiani & Martine Druant & Ignacio Hernando & Claudia Kwapil & Bettina Landau & Claire Loupias & Fernando Martins & Thomas Mathä & Roberto Sabbatini & Harald Stahl & Ad Stokman, 2006. "What Firms' Surveys Tell Us about Price-Setting Behavior in the Euro Area," International Journal of Central Banking, International Journal of Central Banking, vol. 2(3), September.
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    10. Fabiani, Silvia & Loupias, Claire & Martins, Fernando & Sabbatini, Roberto (ed.), 2007. "Pricing Decisions in the Euro Area: How Firms Set Prices and Why," OUP Catalogue, Oxford University Press, number 9780195309287.
    11. Martins, Fernando, 2005. "The price setting behaviour of Portuguese firms: evidence from survey data," Working Paper Series 562, European Central Bank.
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    Cited by:

    1. Ahrens, Steffen & Pirschel, Inske & Snower, Dennis J., 2017. "A theory of price adjustment under loss aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 78-95.
    2. Choudhary, M. Ali & Faheem, Abdul & Hanif, M. Nadim & Naeem, Saima & Pasha, Farooq, 2016. "Price setting & price stickiness: A developing economy perspective," Journal of Macroeconomics, Elsevier, vol. 48(C), pages 44-61.
    3. Fernando Martins, 2016. "How the Portuguese firms adjusted to the economic and financial crisis: main shocks and channels of adjustment," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    4. Kenichi MATSUMOTO & Azusa OKAGAWA, 2010. "Analysis of Economic and Environmental Impacts of CO2 Abatement in Japan Applying a CGE Model with Knowledge Investment," EcoMod2010 259600115, EcoMod.
    5. Fernando Martins, 2013. "Survey evidence on price and wage rigidities in Portugal," Working Papers w201312, Banco de Portugal, Economics and Research Department.
    6. Peter Burgold, 2013. "Nominale Abwertung innerhalb einer Währungsunion," Global Financial Markets Working Paper Series 47-2013, Friedrich-Schiller-University Jena.
    7. Fernando Martins, 2015. "What Survey Data Reveal about Price and Wage Rigidity in Portugal," LABOUR, CEIS, vol. 29(3), pages 291-309, September.

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