Why are some prices stickier than others? Firm-data evidence on price adjustment lags
AbstractInfrequent price changes at the firm level are now well documented in the literature. However, a number of issues remain partly unaddressed. This paper contributes to the literature on price stickiness by investigating the lags of price adjustments to different types of shocks. We find that adjustment lags to cost and demand shocks vary with firm characteristics, namely the firm’s cost structure, the type of pricing policy, and the type of good. We also document that firms react asymmetrically to demand and cost shocks, as well as to positive and negative shocks, and that the degree and direction of the asymmetry varies across firms. JEL Classification: C41, D40, E31
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Bibliographic InfoPaper provided by European Central Bank in its series Working Paper Series with number 1306.
Date of creation: Mar 2011
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Other versions of this item:
- Daniel Dias & Carlos Robalo Marques & Fernando Martins & J.M.C.Santos Silva, 2011. "Why Are Some Prices Stickier Than Others? Firm-Data Evidence on Price Adjustment Lags," Working Papers w201107, Banco de Portugal, Economics and Research Department.
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- D40 - Microeconomics - - Market Structure and Pricing - - - General
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-03-12 (All new papers)
- NEP-BEC-2011-03-12 (Business Economics)
- NEP-CBA-2011-03-12 (Central Banking)
- NEP-COM-2011-03-12 (Industrial Competition)
- NEP-HME-2011-03-12 (Heterodox Microeconomics)
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