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Dynamics of Price Adjustments: Evidence From Micro Level Data For Chile

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  • Juan Pablo Medina G.
  • David Rappoport W.
  • Claudio Soto G.

Abstract

This paper characterizes the dynamics of price adjustments in Chile using data at the establishment level of goods in the CPI basket. Our results show that nominal rigidities are lower when measured at micro-level compared to estimates based on macro data. The frequency of price adjustments appears to be relatively stable over the sample period 1999-2005. On the other hand, if we decompose price adjustments in upward and downward changes, we observe that these frequencies of adjustments for some groups of products are correlated with the level of aggregate inflation. Thus, the data shows that the intensive and extensive margins of price adjustment play a role in determining price dynamics. Finally, we find a considerable degree of synchronization in price adjustments across establishments and a moderate increase in price dispersion since 1999.

Suggested Citation

  • Juan Pablo Medina G. & David Rappoport W. & Claudio Soto G., 2007. "Dynamics of Price Adjustments: Evidence From Micro Level Data For Chile," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 10(2), pages 5-26, August.
  • Handle: RePEc:chb:bcchec:v:10:y:2007:i:2:p:5-26
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    References listed on IDEAS

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    Cited by:

    1. Gastón Chaumont & Miguel Fuentes & Felipe Labbé & Alberto Naudón, 2011. "A Reassesment of Flexible Price Evidence Using Scanner Data: Evidence from an Emerging Economy," Working Papers Central Bank of Chile 632, Central Bank of Chile.
    2. repec:mes:emfitr:v:52:y:2016:i:4:p:1029-1045 is not listed on IDEAS
    3. repec:cml:incocp:2sp-9 is not listed on IDEAS
    4. Anand, Rahul & Prasad, Eswar S. & Zhang, Boyang, 2015. "What measure of inflation should a developing country central bank target?," Journal of Monetary Economics, Elsevier, vol. 74(C), pages 102-116.
    5. Tosapol Apaitan & Piti Disyatat & Pym Manopimoke, 2018. "Price Setting Behavior in Thailand: Evidence from Micro CPI Data," PIER Discussion Papers 85, Puey Ungphakorn Institute for Economic Research, revised May 2018.
    6. repec:cml:incocp:2en-9 is not listed on IDEAS
    7. Gastón Chaumont & Miguel Fuentes & Felipe Labbé & Alberto Naudon, 2011. "Dinámica de Precios en Chile: Evidencia con datos de Supermercados," Working Papers Central Bank of Chile 642, Central Bank of Chile.
    8. Klenow, Peter J. & Malin, Benjamin A., 2010. "Microeconomic Evidence on Price-Setting," Handbook of Monetary Economics,in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 6, pages 231-284 Elsevier.
    9. Ahmad, Yamin S. & Staveley-O’Carroll, Olena M., 2017. "Exploring international differences in inflation dynamics," Journal of International Money and Finance, Elsevier, vol. 79(C), pages 115-135.
    10. Fernando Borraz & Leandro Zipitría & Enrique López Enciso, 2013. "Price Setting in Retailing: the Case of Uruguay," Investigación Conjunta-Joint Research,in: Laura Inés D'Amato & Enrique López Enciso & María Teresa Ramírez Giraldo (ed.), Inflationary Dynamics, Persistence, and Prices and Wages Formation, edition 1, chapter 9, pages 193-220 Centro de Estudios Monetarios Latinoamericanos, CEMLA.
    11. Kochen Federico, 2016. "Price-Setting in Mexico and the Real Effects of Monetary Shocks," Working Papers 2016-21, Banco de México.
    12. M. Utku Özmen & Orhun Sevinç, 2016. "Price Rigidity in Turkey: Evidence from Micro Data," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 52(4), pages 1029-1045, April.

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