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Price-setting behaviour in Spain: evidence from micro PPI data

  • Luis J. �lvarez

    (Banco de Espa�a, DG Economics, Statistics and Research, Alcalá 48, Madrid, Spain)

  • Pablo Burriel

    (Banco de Espa�a, DG Economics, Statistics and Research, Alcalá 48, Madrid, Spain)

  • Ignacio Hernando

    (Banco de Espa�a, DG Economics, Statistics and Research, Alcalá 48, Madrid, Spain)

This paper explores the key features of manufacturing price-setting behaviour in Spain using an extensive micro Producer Price Index data set. The main focus is placed on the impact on the frequency of price adjustment of some explanatory variables, including the cost structure, degree of market competition, demand conditions and inflationary pressures. All these factors are found to explain cross industry heterogeneity in price stickiness. A comparison of consumer and producer price-setting practices is also presented to ascertain the role of the retail sector in explaining price stickiness. We find some evidence that producer prices are more flexible than consumer prices. Copyright © 2010 John Wiley & Sons, Ltd.

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Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 31 (2010)
Issue (Month): 2-3 ()
Pages: 105-121

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Handle: RePEc:wly:mgtdec:v:31:y:2010:i:2-3:p:105-121
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