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Consumer Price Setting in Italy

Author

Listed:
  • Silvia Fabiani

    () (Bank of Italy)

  • Angela Gattulli

    () (Bank of Italy)

  • Roberto Sabbatini

    () (Bank of Italy)

  • Giovanni Veronese

    () (Bank of Italy)

Abstract

This paper investigates the microeconomic behaviour of consumer prices in Italy using the individual price records collected by Istat. We discuss how to analyse price stickiness and we compute a quantitative measure of the unconditional degree of price rigidity. Prices are found to be rather sticky, remaining unchanged on average for around 10 months; price spells last longer for non-energy industrial goods and services, much less for energy products. Prices are revised more frequently upwards than downwards, while the size of price changes is quite symmetric. Price stickiness is less marked in large modern stores than in traditional shops. Price changes are quite synchronized, in particular in the services sector.

Suggested Citation

  • Silvia Fabiani & Angela Gattulli & Roberto Sabbatini & Giovanni Veronese, 2006. "Consumer Price Setting in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 65(1), pages 31-74, May.
  • Handle: RePEc:gde:journl:gde_v65_n1_p31-74
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    References listed on IDEAS

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    Cited by:

    1. Silvia Fabiani & Angela Gattulli & Giovanni Veronese & Roberto Sabbatini, 2010. "Price adjustment in Italy: evidence from micro producer and consumer prices," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 31(2-3), pages 93-104.
    2. Eugenio Gaiotti, 2010. "Commentary: Has Globalization Changed the Phillips Curve? Firm-Level Evidence on the Effect of Activity on Prices," International Journal of Central Banking, International Journal of Central Banking, vol. 6(1), pages 51-84, March.
    3. Andrea Vaona & Guido Ascari, 2012. "Regional Inflation Persistence: Evidence from Italy," Regional Studies, Taylor & Francis Journals, vol. 46(4), pages 509-523, June.
    4. Alvarez González, Luis Julián, 2008. "What Do Micro Price Data Tell Us on the Validity of the New Keynesian Phillips Curve?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-36.
    5. Baumgartner, Josef & Glatzer, Ernst & Rumler, Fabio & Stiglbauer, Alfred, 2005. "How frequently do consumer prices change in Austria? Evidence from micro CPI data," Working Paper Series 523, European Central Bank.
    6. Emmanuel Dhyne & Luis J. Álvarez & Hervé Le Bihan & Giovanni Veronese & Daniel Dias & Johannes Hoffmann & Nicole Jonker & Patrick Lünnemann & Fabio Rumler & Jouko Vilmunen, 2005. "Price setting in the euro area: Some stylized facts from Individual Consumer Price Data," Working Paper Research 74, National Bank of Belgium.
    7. Luis J. Álvarez & Emmanuel Dhyne & Marco Hoeberichts & Claudia Kwapil & Hervé Le Bihan & Patrick Lünnemann & Fernando Martins & Roberto Sabbatini & Harald Stahl & Philip Vermeulen & Jouko Vilmunen, 2006. "Sticky Prices in the Euro Area: A Summary of New Micro-Evidence," Journal of the European Economic Association, MIT Press, vol. 4(2-3), pages 575-584, 04-05.
    8. 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.
    9. 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.
    10. Huw D. Dixon, 2010. "A Unified Framework for Using Micro-Data to Compare Dynamic Wage and Price Setting Models," CESifo Working Paper Series 3093, CESifo Group Munich.
    11. Paolo Del Giovane & Roberto Sabbatini, 2006. "Perceived and Measured Inflation after the Launch of the Euro: Explaining the Gap in Italy," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 65(2), pages 155-192, November.
    12. Matteo Bugamelli & Alfonso Rosolia, 2006. "Productivity and foreign competition," Temi di discussione (Economic working papers) 578, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    consumer prices; nominal rigidity; frequency of price change;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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