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Dynamics of Price Adjustments: Evidence From Micro Level Data for Chile

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  • Juan Pablo Medina
  • David Rappoport
  • Claudio Soto

Abstract

This paper characterizes the dynamics of price adjustments in Chile using data at the establishment level of goods in the CPI basket. Our results show that nominal rigidities are lower when measured at micro-level compared to estimates based on macro data. The frequency of price adjustments appears to be relatively stable over the sample period 1999-2005. On the other hand, if we decompose price adjustments in upward and downward changes, we observe that these frequencies of adjustments for some groups of products are correlated with the level of aggregate inflation. Thus, the data shows that the intensive and extensive margins of price adjustment play a role in determining price dynamics. Finally, we find a considerable degree of synchronization in price adjustments across establishments and a moderate increase in price dispersion since 1999

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Bibliographic Info

Paper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 432.

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Date of creation: Oct 2007
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Handle: RePEc:chb:bcchwp:432

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Citations

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Cited by:
  1. Gastón Chaumont; Miguel Fuentes; Felipe Labbé; Alberto Naudon, 2011. "A Reassessment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy," Working Papers Central Bank of Chile 641, Central Bank of Chile.
  2. Fernando Borraz & Leandro Zipitría, 2012. "Price Setting in Retailing: The Case of Uruguay," Journal of LACEA Economia, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
  3. Klenow, Peter J. & Malin, Benjamin A., 2010. "Microeconomic Evidence on Price-Setting," Handbook of Monetary Economics, in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 6, pages 231-284 Elsevier.
  4. 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.
  5. Felipe Morandé Lavín & Mauricio Tejada, 2008. "Price Stickiness in Emerging Economies: Empirical Evidence for Four Latin-American Countries," Working Papers wp286, University of Chile, Department of Economics.
  6. M. Utku Ozmen & Orhun Sevinc, 2011. "Price Rigidity In Turkey : Evidence From Micro Data," Working Papers 1125, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
  7. Gastón Chaumont & Miguel Fuentes & Felipe Labbé & Alberto Naudon, 2011. "Dinámica de Precios en Chile: Evidencia con datos de Supermercados," Working Papers Central Bank of Chile 642, Central Bank of Chile.

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