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Price Dynamics in UK Manufacturing: A Microeconomic View

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  • Geroski, P A

Abstract

This paper examines the response of prices to cost and demand shocks in seventy-five three-digit and four-digit industries in the United Kingdom during the 1980s. The results suggest that prices responded sluggishly to costs but virtually not at all to demand; the short-run response to materials and fuel shocks was much larger than the response to unit labor cost shocks and some of this difference persisted.into the long run; prices responded more sluggishly to cost and demand shocks when aggregate inflation was lower; and, finally, pricing dynamics were more sluggish in less competitive industries. Copyright 1992 by The London School of Economics and Political Science.

Suggested Citation

  • Geroski, P A, 1992. "Price Dynamics in UK Manufacturing: A Microeconomic View," Economica, London School of Economics and Political Science, vol. 59(236), pages 403-419, November.
  • Handle: RePEc:bla:econom:v:59:y:1992:i:236:p:403-19
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    Cited by:

    1. Garrod, Luke, 2012. "Collusive price rigidity under price-matching punishments," International Journal of Industrial Organization, Elsevier, vol. 30(5), pages 471-482.
    2. repec:cml:incocp:2en-11 is not listed on IDEAS
    3. Daniel Levy & Haipeng (Allan) Chen & Georg Müller & Shantanu Dutta & Mark Bergen, 2010. "Holiday Price Rigidity and Cost of Price Adjustment," Economica, London School of Economics and Political Science, vol. 77(305), pages 172-198, January.
    4. Philip Vermeulen & Daniel A. Dias & Maarten Dossche & Erwan Gautier & Ignacio Hernando & Roberto Sabbatini & Harald Stahl, 2012. "Price Setting in the Euro Area: Some Stylized Facts from Individual Producer Price Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(8), pages 1631-1650, December.
    5. Luis J. Álvarez & Ignacio Hernando, 2005. "The price setting behaviour of Spanish firms: evidence from survey data," Working Papers 0537, Banco de España;Working Papers Homepage.
    6. M. Druant & S. Fabiani & Gabor Kezdi & Ana Lamo & R. Sabbatini & Fernando Martins, 2009. "How are Firms’ Wages and Prices Linked: Survey Evidence in Europe," Working Papers w200918, Banco de Portugal, Economics and Research Department.
    7. Druant, Martine & Fabiani, Silvia & Kezdi, Gabor & Lamo, Ana & Martins, Fernando & Sabbatini, Roberto, 2012. "Firms' price and wage adjustment in Europe: Survey evidence on nominal stickiness," Labour Economics, Elsevier, vol. 19(5), pages 772-782.
    8. Aida Caldera Sánchez & Morten Rasmussen & Oliver Röhn, 2016. "Economic Resilience: What Role for Policies?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 1-44, June.
    9. Watson, Anna, 2016. "Trade openness and inflation: The role of real and nominal price rigidities," Journal of International Money and Finance, Elsevier, vol. 64(C), pages 137-169.
    10. Martha Misas A. & Enrique López E. & Juan Carlos Parra A., 2013. "La formación de precios en las empresas colombianas: evidencia a partir de una encuesta directa," Investigación Conjunta-Joint Research,in: Laura Inés D'Amato & Enrique López Enciso & María Teresa Ramírez Giraldo (ed.), Dinámica inflacionaria, persistencia y formación de precios y salarios, edition 1, chapter 11, pages 273-348 Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    11. Paul Downward & Frederick Lee, "undated". "Post Keynesian Pricing Theory `Reconfirmed'(?) A Critical Review of `Asking About Prices'," Working Papers 98-13, Staffordshire University, Business School.
    12. G. R. Chen, 2016. "Dynamic Model for Market Competition and Price Rigidity," Applied Economics, Taylor & Francis Journals, vol. 48(36), pages 3485-3496, August.
    13. Kylie Rochford, 2010. "Those who stayed loyal: An empirical examination of New Zealand manufacturers surviving in a global market," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing, vol. 4(4), pages 346-371, October.
    14. Georg Müller & Mark Bergen & Shantanu Dutta & Daniel Levy, 2007. "Non-price rigidity and cost of adjustment," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(7), pages 817-832.
    15. repec:cml:incoes:2en is not listed on IDEAS
    16. Heiner Mikosch, 2012. "Sticky Prices, Competition and the Phillips Curve," KOF Working papers 11-294, KOF Swiss Economic Institute, ETH Zurich.
    17. Fernando Martins, 2013. "Survey evidence on price and wage rigidities in Portugal," Working Papers w201312, Banco de Portugal, Economics and Research Department.
    18. Nicoletta Batini & Brian Jackson & Stephen Nickell, 2002. "The Pricing Behaviour of UK Firms," Discussion Papers 09, Monetary Policy Committee Unit, Bank of England.
    19. Torben Andersen & Niels Hansen, 1995. "Price adjustment in open economies," Open Economies Review, Springer, vol. 6(4), pages 303-321, October.
    20. Florian Huber & Magdalena Petrovska, 2015. "Price and Wage Rigidities in the Republic of Macedonia: Survey Evidence from Micro- Level Data," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 49-64.
    21. Simon Hall & Mark Walsh & Anthony Yates, 1997. "How do UK companies set prices?," Bank of England working papers 67, Bank of England.
    22. Fernando Martins, 2015. "What Survey Data Reveal about Price and Wage Rigidity in Portugal," LABOUR, CEIS, vol. 29(3), pages 291-309, September.
    23. Heiner Mikosch, 2012. "Sticky Prices, Competition and the Phillips Curve," KOF Working papers 12-294, KOF Swiss Economic Institute, ETH Zurich.

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