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Price-Setting Behavior in Brazil: Survey Evidence

Author

Listed:
  • Arnildo Correa

    (Banco Central do Brasil)

  • Myrian Petrassi

    (Banco Central do Brasil)

  • Rafael Santos

    (Banco Central do Brasil and EPGE/FGV)

Abstract

Price surveys became popular after the seminal work of Blinder (Am Econ Rev 81(2):89–100, 1991) exploring US firms’ price-setting practices, which filled some blanks left by the simple observation of prices charged by firms. The present paper reports the findings from a survey conducted by the Central Bank of Brazil with local firms and discusses some policy implications. The sample consisted of 7002 firms and three economic sectors: manufacturing, services and commerce. Data suggest important features about price-setting behavior in Brazil: the cost of reviewing prices is low, but there is significant nominal rigidity—firms report to change prices approximately 3.6 times per year; state-dependent rules seem to be more frequent than time-dependent behavior; markup pricing appears to be the dominant strategy; and the two most important factors driving price changes in Brazil are the cost of intermediate goods and the inflation rate .

Suggested Citation

  • Arnildo Correa & Myrian Petrassi & Rafael Santos, 2018. "Price-Setting Behavior in Brazil: Survey Evidence," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 14(2), pages 283-310, November.
    • Handle: RePEc:spr:jbuscr:v:14:y:2018:i:2:d:10.1007_s41549-018-0029-x
    DOI: 10.1007/s41549-018-0029-x
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    More about this item

    Keywords

    Survey data; Price setting; Nominal rigidity; Micro price data;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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