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.
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Bibliographic InfoPaper provided by Banco de Portugal, Economics and Research Department in its series Working Papers with number w201107.
Date of creation: 2011
Date of revision:
Other versions of this item:
- Dias, Daniel & Robalo Marques, Carlos & Martins, Fernando & Santos Silva, João M. C., 2011. "Why are some prices stickier than others? Firm-data evidence on price adjustment lags," Working Paper Series 1306, European Central Bank.
- 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-2011-04-02 (All new papers)
- NEP-CBA-2011-04-02 (Central Banking)
- NEP-COM-2011-04-02 (Industrial Competition)
- NEP-HME-2011-04-02 (Heterodox Microeconomics)
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