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What do Thirteen Million Price Records have to Say about Consumer Price Rigidity?

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  • Laurent Baudry
  • Hervé Le Bihan
  • Patrick Sevestre
  • Sylvie Tarrieu

Abstract

Based on the analysis of 13 million price records underlying the computation of the French consumer price index, we provide a detailed assessment of consumer price rigidity. Our main results are as follows. The average duration of prices is around 8 months. Price durations and the patterns of price‐setting strongly differ across sectors. Price cuts are almost as frequent as increases, suggesting no specific downward nominal rigidity. Price changes typically have large absolute sizes. Time variation in the frequency of price changes and in their size both contribute to inflation fluctuations. Overall there is evidence of both time‐ and state‐dependent price‐setting.

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  • Laurent Baudry & Hervé Le Bihan & Patrick Sevestre & Sylvie Tarrieu, 2007. "What do Thirteen Million Price Records have to Say about Consumer Price Rigidity?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 69(2), pages 139-183, April.
  • Handle: RePEc:bla:obuest:v:69:y:2007:i:2:p:139-183
    DOI: 10.1111/j.1468-0084.2007.00473.x
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