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Price adjustment in German manufacturing: evidence from two merged surveys

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  • Harald Stahl

    (Deutsche Bundesbank, Wilhelm-Epstein-Strasse 14, 60431 Frankfurt am Main, Germany)

Abstract

This paper presents new evidence on the formation of producer prices. The database combines a one-time survey that was conducted in June 2004 on a sample of 1200 firms in manufacturing and time series information on price adjustment of the same firms. Twenty percent of firms set prices as time-dependent but neither Taylor nor Calvo-type price setting describes them aptly. Few firms are forward-looking. According to the one-time survey, fixed contracts and coordination failure are the main reason for postponing price adjustment. However, the hazard rates for price changes from the time series information do not support this. Copyright © 2009 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1485
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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 31 (2010)
Issue (Month): 2-3 ()
Pages: 67-92

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Handle: RePEc:wly:mgtdec:v:31:y:2010:i:2-3:p:67-92

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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  1. N. Gregory Mankiw & Ricardo Reis, 2001. "Sticky information versus sticky prices: a proposal to replace the New-Keynesian Phillips curve," Proceedings, Federal Reserve Bank of San Francisco, issue Jun.
  2. Peter J. Klenow & Jonathan L. Willis, 2006. "Sticky information and sticky prices," Research Working Paper RWP 06-13, Federal Reserve Bank of Kansas City.
  3. Ricardo Reis, 2006. "Inattentive Producers," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 793-821.
  4. Hall, Simon & Walsh, Mark & Yates, Anthony, 2000. "Are UK Companies' Prices Sticky?," Oxford Economic Papers, Oxford University Press, vol. 52(3), pages 425-46, July.
  5. Stahl, Harald, 2005. "Price setting in German manufacturing: new evidence from new survey data," Working Paper Series 0561, European Central Bank.
  6. Woglom, Geoffrey, 1982. "Underemployment Equilibrium with Rational Expectations," The Quarterly Journal of Economics, MIT Press, vol. 97(1), pages 89-107, February.
  7. Silvia Fabiani & Martine Druant & Ignacio Hernando & Claudia Kwapil & Bettina Landau & Claire Loupias & Fernando Martins & Thomas Mathä & Roberto Sabbatini & Harald Stahl & Ad Stokman, 2005. "The pricing behaviour of firms in the Euro area: new survey evidence," Banco de Espa�a Working Papers 0536, Banco de Espa�a.
  8. Taylor, John B, 1980. "Aggregate Dynamics and Staggered Contracts," Journal of Political Economy, University of Chicago Press, vol. 88(1), pages 1-23, February.
  9. Lawrence J. Christiano & Martin Eichenbaum & Charles L. Evans, 2001. "Nominal rigidities and the dynamic effects of a shock to monetary policy," Working Paper Series WP-01-08, Federal Reserve Bank of Chicago.
  10. Harald Stahl, 2010. "Price adjustment in German manufacturing: evidence from two merged surveys," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(2-3), pages 67-92.
  11. Fabiani, Silvia & Druant, Martine & Hernando, Ignacio & Kwapil, Claudia & Landau, Bettina & Loupias, Claire & Martins, Fernando & Matha, Thomas & Sabbatini, Roberto & Stahl, Harald & Stokman, Ad, 2006. "What Firms' Surveys Tell Us about Price-Setting Behavior in the Euro Area," MPRA Paper 808, University Library of Munich, Germany.
  12. Gali, Jordi & Gertler, Mark, 1999. "Inflation dynamics: A structural econometric analysis," Journal of Monetary Economics, Elsevier, vol. 44(2), pages 195-222, October.
  13. Apel, Mikael & Friberg, Richard & Hallsten, Kerstin, 2005. "Microfoundations of Macroeconomic Price Adjustment: Survey Evidence from Swedish Firms," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(2), pages 313-38, April.
  14. Carlton, Dennis W, 1986. "The Rigidity of Prices," American Economic Review, American Economic Association, vol. 76(4), pages 637-58, September.
  15. Mihai Copaciu & Florian Neagu & Horia Braun-Erdei, 2010. "Survey evidence on price-setting patterns of Romanian firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(2-3), pages 235-247.
  16. Sheshinski, Eytan & Weiss, Yoram, 1977. "Inflation and Costs of Price Adjustment," Review of Economic Studies, Wiley Blackwell, vol. 44(2), pages 287-303, June.
  17. Stahl, Harald, 2005. "Time-dependent or state-dependent price setting? Micro-evidence from German metal-working industries," Discussion Paper Series 1: Economic Studies 2005,25, Deutsche Bundesbank, Research Centre.
  18. Simon Hall & Mark Walsh & Anthony Yates, 1997. "How do UK companies set prices?," Bank of England working papers 67, Bank of England.
  19. Calvo, Guillermo A., 1983. "Staggered prices in a utility-maximizing framework," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 383-398, September.
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Cited by:
  1. Bachmann, Rüdiger & Born, Benjamin & Elstner, Steffen & Grimme, Christian, 2013. "Time-varying business volatility, price setting, and the real effects of monetary policy," Working Papers 01/2013, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
  2. Alvarez González, Luis Julián, 2008. "What Do Micro Price Data Tell Us on the Validity of the New Keynesian Phillips Curve?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 2(19), pages 1-36.
  3. Daniel Levy & Dongwon Lee & Haipeng Chen & Robert Kauffman & Mark Bergen, 2008. "Price Points and Price Rigidity," Emory Economics 0809, Department of Economics, Emory University (Atlanta).
  4. Sarah M. Rupprecht, 2007. "When Do Firms Adjust Prices? Evidence from Micro Panel Data," KOF Working papers 07-160, KOF Swiss Economic Institute, ETH Zurich.
  5. Harald Stahl, 2010. "Price adjustment in German manufacturing: evidence from two merged surveys," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(2-3), pages 67-92.
  6. Schenkelberg, Heike, 2011. "Why are Prices Sticky? Evidence from Business Survey Data," Discussion Papers in Economics 12158, University of Munich, Department of Economics.

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