This paper contributes to the empirical literature on price stickiness by documenting a high rate of nominal rigidity among apartment rents in the U.S. between 1974-1981. 29 percent of units had no change in nominal rent from year to year. Nominal rigidity was much higher among units whose tenants continued from the previous year, than those in which the tenant turned over. This suggests that the previous year's nominal price was used as a focal point in bargaining. Most of the nominal rigidity among units that turned over can be ascribed to grid pricing, while most of the incidence among the units that did not turn over can not be thus explained, and probably reflects downward rigidity instead. Units in single-unit and small buildings were much more likely to display nominal rigidity.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
7137.
Length: Date of creation: May 1999 Date of revision: Handle: RePEc:nbr:nberwo:7137
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Ricardo J. Caballero & Eduardo M.R.A. Engel, 1991.
"Dynamic (S,s) Economies,"
NBER Working Papers
3734, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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Laurence Ball & N. Gregory Mankiw, 1995.
"A Sticky-Price Manifesto,"
NBER Working Papers
4677, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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