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A global assessment of the degree of price stickiness - results from the NBB Business survey

  • Emmanuel Dhyne

In this paper, we estimate the degree of price stickiness in Belgium using the NBB Business survey. Based on our estimates, 19.2% of prices are changed each month. The manufacturing sector and the trade sectors are characterized by a frequency of price changes close to 24.5%. The construction sector is characterized by a frequency of price changes close to 20.5% and B2B service sectors are characterized by a frequency of price changes of almost 9%. Econometric analyses of the determinants of the sectoral frequency of price changes indicate, on the one hand, that cost structure is the main explanatory variable of the sectoral discrepancies. On the other hand, we find that domestic competition does not seem to explain an excess or shortage of price changes at the sectoral level.

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File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/80756/1/3ARTICLE%20DHYNE%20REV%20_3_.pdf
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Article provided by ULB -- Universite Libre de Bruxelles in its journal Brussels economic review.

Volume (Year): 52 (2009)
Issue (Month): 1 ()
Pages: 57-77

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Handle: RePEc:bxr:bxrceb:2013/80756
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  1. Erwan Gautier, 2008. "The behaviour of producer prices: evidence from French PPI micro data," Empirical Economics, Springer, vol. 35(2), pages 301-332, September.
  2. Mark Bils & Peter J. Klenow, 2002. "Some Evidence on the Importance of Sticky Prices," NBER Working Papers 9069, National Bureau of Economic Research, Inc.
  3. Etienne Gagnon, 2009. "Price Setting during Low and High Inflation: Evidence from Mexico," The Quarterly Journal of Economics, Oxford University Press, vol. 124(3), pages 1221-1263.
  4. Emmanuel Dhyne & Luis J. Alvarez & Herve Le Bihan & Giovanni Veronese & Daniel Dias & Johannes Hoffmann & Nicole Jonker & Patrick Lunnemann & Fabio Rumler & Jouko Vilmunen, 2006. "Price Changes in the Euro Area and the United States: Some Facts from Individual Consumer Price Data," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 171-192, Spring.
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  6. Emmanuel Dhyne & Jerzy Konieczny & Fabio Rumler & Patrick Sevestre, 2009. "Price rigidity in the euro area - An assessment," European Economy - Economic Papers 2008 - 2015 380, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
  7. Hoffmann, Johannes & Kurz-Kim, Jeong-Ryeol, 2006. "Consumer price adjustment under the microscope: Germany in a period of low inflation," Discussion Paper Series 1: Economic Studies 2006,16, Deutsche Bundesbank, Research Centre.
  8. Aucremanne, Luc & Druant, Martine, 2005. "Price-setting behaviour in Belgium: what can be learned from an ad hoc survey?," Working Paper Series 0448, European Central Bank.
  9. Eyal Baharad & Benjamin Eden, 2003. "Price Rigidity and Price Dispersion: Evidence from Micro Data," Vanderbilt University Department of Economics Working Papers 0321, Vanderbilt University Department of Economics.
  10. Papke, Leslie E & Wooldridge, Jeffrey M, 1996. "Econometric Methods for Fractional Response Variables with an Application to 401(K) Plan Participation Rates," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 619-32, Nov.-Dec..
  11. Cecchetti, Stephen G., 1986. "The frequency of price adjustment : A study of the newsstand prices of magazines," Journal of Econometrics, Elsevier, vol. 31(3), pages 255-274, April.
  12. Luc Aucremanne & Martine Druant, 2005. "Price-setting behaviour in Belgium: what can be learned from an ad hoc survey ?," Working Paper Research 65, National Bank of Belgium.
  13. David Cornille & Maarten Dossche, 2008. "Some Evidence on the Adjustment of Producer Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(3), pages 489-518, 09.
  14. Emi Nakamura & Jón Steinsson, 2008. "Five Facts about Prices: A Reevaluation of Menu Cost Models," The Quarterly Journal of Economics, Oxford University Press, vol. 123(4), pages 1415-1464.
  15. Luc Aucremanne & Emmanuel Dhyne, 2004. "How frequently do prices change? Evidence based on the micro data underlying the Belgian CPI," Working Paper Research 44, National Bank of Belgium.
  16. Coricelli, Fabrizio & Horváth, Roman, 2006. "Price Setting Behaviour: Micro Evidence on Slovakia," CEPR Discussion Papers 5445, C.E.P.R. Discussion Papers.
  17. Lach, Saul & Tsiddon, Daniel, 1996. "Staggering and Synchronization in Price-Setting: Evidence from Multiproduct Firms," American Economic Review, American Economic Association, vol. 86(5), pages 1175-96, December.
  18. Anil K Kashyap, 1995. "Sticky Prices: New Evidence from Retail Catalogs," The Quarterly Journal of Economics, Oxford University Press, vol. 110(1), pages 245-274.
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