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Sticky prices in the euro area: a summary of new micro evidence

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Author Info
Álvarez, Luís
Dhyne, Emmanuel
Hoeberichts, Marco
Kwapil, Claudia
Le Bihan, Hervé
Lünnemann, Patrick
Martins, Fernando
Sabbatini, Roberto
Stahl, Harald
Vermeulen, Philip
Vilmunen, Juoko

Additional information is available for the following registered author(s):

Abstract

This paper presents original evidence on price setting in the euro area at the individual level. We use micro data on consumer (CPI) and producer (PPI) prices, as well as survey information. Our main findings are: (i) prices in the euro area are sticky and more so than in the US; (ii) there is evidence of heterogeneity and of asymmetries in price setting behaviour; (iii) downward price rigidity is only slightly more marked than upward price rigidity and (iv) implicit or explicit contracts and coordination failure theories are important, whereas menu or information costs are judged much less relevant by firms.

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Publisher Info
Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2006,02.

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Date of creation: 2006
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Handle: RePEc:zbw:bubdp1:4239

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Related research
Keywords: Price setting; Price stickiness; Consumer prices; Producer prices; survey data;

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Find related papers by JEL classification:
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
D40 - Microeconomics - - Market Structure and Pricing - - - General
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models

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