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Sticky prices in the euro area: a summary of new micro evidence

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Author Info

  • Luis J. Álvarez

    ()
    (Banco de España)

  • Emmanuel Dhyne

    ()
    (Banque Nationale de Belgique)

  • Marco M. Hoeberichts

    ()
    (De Nederlandsche Bank)

  • Claudia Kwapil

    ()
    (Oesterreichische Nationalbank)

  • Hervé le Bihan

    ()
    (Banque de France)

  • Patrick Lünnemann

    ()
    (Banque Centrale du Luxembourg)

  • Fernando Martins

    ()
    (Banco de Portugal)

  • Roberto Sabbatini

    ()
    (Banca d’Italia)

  • Harald Stahl

    ()
    (Deutsche Bundesbank)

  • Philip Vermeulen

    ()
    (European Central Bank)

  • Jouko Vilmunen

    ()
    (Bank of Finland)

Abstract

This paper presents original evidence on price setting in the euro area at the individual level. We use micro data on consumer (CPI) and producer (PPI) prices, as well as survey information. Our main findings are: (i) prices in the euro area are sticky and more so than in the US; (ii) there is evidence of heterogeneity and of asymmetries in price setting behaviour; (iii) downward price rigidity is only slightly more marked than upward price rigidity and (iv) implicit or explicit contracts and coordination failure theories are important, whereas menu or information costs are judged much less relevant by firms.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/05/Fic/dt0542e.pdf
File Function: First version, December 2005
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0542.

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Length: 26 pages
Date of creation: Dec 2005
Date of revision:
Handle: RePEc:bde:wpaper:0542

Note: Also published as ECB Working Paper Nº 563.
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Web page: http://www.bde.es/
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Keywords: price setting; price stickiness; consumer prices; producer prices; survey data;

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References

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