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Explaining cross-industry heterogeneity in price stickiness

Author

Listed:
  • Luis Julián Álvarez

    () (Banco de España)

  • Pablo Burriel

    () (Banco de España)

  • Ignacio Hernando

    () (Banco de España)

Abstract

This note explains cross industry heterogeneity in the frequency of price adjustment. We use the quasi-maximum approach of Papke and Wooldridge (1996) to avoid the shortcomings of OLS regressions to analyse frequencies. We pay particular attention to the role of costs and market competition in explaining cross-industry differences. We find that prices are stickier the higher the labour cost share and the lower are competition and the intermediate input share.

Suggested Citation

  • Luis Julián Álvarez & Pablo Burriel & Ignacio Hernando, 2011. "Explaining cross-industry heterogeneity in price stickiness," Economics Bulletin, AccessEcon, vol. 31(1), pages 644-653.
  • Handle: RePEc:ebl:ecbull:eb-10-00121
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    File URL: http://www.accessecon.com/Pubs/EB/2011/Volume31/EB-11-V31-I1-P62.pdf
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    More about this item

    Keywords

    producer prices; frequency of price changes; market competition; cost structure;

    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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