Survey of Price-Setting Behaviour of Canadian Companies
AbstractIn many mainstream macroeconomic models, sticky prices play an important role in explaining the effects of monetary policy on the economy. Various theories have been set forth to explain why prices are sticky. This study takes a firm-level survey approach, in a spirit similar to Blinder et al. (1998), to shed some light on the question of why prices are sticky. In particular, the Bank of Canada's regional offices surveyed 170 Canadian firms for their views on price dynamics. The authors find that the most important motivators of price changes are price changes by competitors, changes in domestic input costs, and changes in demand. Surprisingly, but consistent with the results reported in Bils and Klenow (2002), the survey evidence suggests that more than 50 per cent of firms change their prices more than four times a year. Moreover, the survey indicates that prices change more frequently than they did ten years ago, because of more intense competition and advances in information technology.
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Bibliographic InfoPaper provided by Bank of Canada in its series Working Papers with number 06-35.
Length: 65 pages
Date of creation: 2006
Date of revision:
Contact details of provider:
Postal: 234 Wellington Street, Ottawa, Ontario, K1A 0G9, Canada
Phone: 613 782-8845
Fax: 613 782-8874
Web page: http://www.bank-banque-canada.ca/
Inflation and prices; Transmission of monetary policy;
Find related papers by JEL classification:
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-07 (All new papers)
- NEP-CBA-2006-10-07 (Central Banking)
- NEP-MAC-2006-10-07 (Macroeconomics)
- NEP-MON-2006-10-07 (Monetary Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mark Bils & Peter J. Klenow, 2004.
"Some Evidence on the Importance of Sticky Prices,"
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"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.
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NBER Working Papers
2327, National Bureau of Economic Research, Inc.
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Kiel Working Papers
1330, Kiel Institute for the World Economy.
- 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.
- Luis J. Álvarez, 2007. "What do micro price data tell us on the validity of the New Keynesian Phillips Curve?," Banco de EspaÃÂ±a Working Papers 0728, Banco de EspaÃ±a.
- Álvarez, Luis J., 2007. "What Do Micro Price Data Tell Us on the Validity of the New Keynesian Phillips Curve?," Economics Discussion Papers 2007-46, Kiel Institute for the World Economy.
- Mario J. Crucini & Mototsugu Shintani & Takayuki Tsuruga, 2008.
"Accounting for Persistence and Volatility of Good-Level Real Exchange Rates: The Role of Sticky Information,"
Vanderbilt University Department of Economics Working Papers
0810, Vanderbilt University Department of Economics.
- Crucini, Mario J. & Shintani, Mototsugu & Tsuruga, Takayuki, 2010. "Accounting for persistence and volatility of good-level real exchange rates: The role of sticky information," Journal of International Economics, Elsevier, vol. 81(1), pages 48-60, May.
- Mario J. Crucini & Mototsugu Shintani & and Takayuki Tsuruga, 2008. "Accounting for Persistence and Volatility of Good-level Real Exchange Rates: The Role of Sticky Information," IMES Discussion Paper Series 08-E-05, Institute for Monetary and Economic Studies, Bank of Japan.
- Mario J. Crucini & Mototsugu Shintani & Takayuki Tsuruga, 2008. "Accounting for persistence and volatility of good-level real exchange rates: the role of sticky information," Globalization and Monetary Policy Institute Working Paper 07, Federal Reserve Bank of Dallas.
- Mario J. Crucini & Mototsugu Shintani & Takayuki Tsuruga, 2008. "Accounting for Persistence and Volatility of Good-Level Real Exchange Rates: The Role of Sticky Information," NBER Working Papers 14381, National Bureau of Economic Research, Inc.
- Kleshchelski, Isaac & Vincent, Nicolas, 2009. "Market share and price rigidity," Journal of Monetary Economics, Elsevier, vol. 56(3), pages 344-352, April.
- Jan Babecky & Kamil Dybczak & Kamil Galuscak, 2008. "Survey on Wage and Price Formation of Czech Firms," Working Papers 2008/12, Czech National Bank, Research Department.
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