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Temporal Distribution of Price Changes: Staggering in the Large and Synchronization in the Small

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  • Emmanuel Dhyne

    ()
    (National Bank of Belgium and Centre de Recherche WarocquŽ, UniversitŽ de Mons-Hainaut, Belgium)

  • Jerzy Konieczny

    ()
    (Wilfrid Laurier University, Waterloo, Ont., Canada and The Rimini Centre for Economic Analysis, Rimini, Italy)

Abstract

Temporal distribution of individual price changes is of crucial importance for business cycle theory and for the microfoundations of price adjustment. While it is routinely assumed that price changes are staggered over time, both theory and evidence are ambiguous. We use a large Belgian data set to analyze whether price changes are staggered or synchronized. We find that the more aggregated are the data, the closer is the distribution to perfect staggering. This result holds both for aggregation across goods, and across locations. Our results provide support for BhaskarÕs (2002) model of synchronized adjustment within, and staggered adjustment across, industries.

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Bibliographic Info

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 01-07.

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Date of creation: Jul 2007
Date of revision: Jul 2007
Handle: RePEc:rim:rimwps:01-07

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  1. Olivier Jean Blanchard & Stanley Fischer, 1989. "Lectures on Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262022834, December.
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