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Rigidities and inflation persistence of services and regulated prices

  • Patrick Lünnemann

    (Banque centrale du Luxembourg, Economics and Research Department, Boulevard Royal, Luxembourg)

  • Thomas Y. Mathä

    (Banque centrale du Luxembourg, Economics and Research Department, Boulevard Royal, Luxembourg)

This paper studies price level rigidity and inflation persistence for EU15 member states using data on more than 1500 HICP sub-indices. Services and HICP sub-indices subject to price regulation exhibit a higher degree of price rigidity, with less frequent but larger index changes and a stronger asymmetry between increases and decreases. For most countries as well as for the EU15 and the euro area aggregates, excluding services from the HICP leads to a lower measured degree of inflation persistence; a similar though smaller effect is obtained by removing regulated indices from the HICP. 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: 193-208

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Handle: RePEc:wly:mgtdec:v:31:y:2010:i:2-3:p:193-208
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  1. Fabiani, S. & Druant, M. & Hernando, I. & Kwapil, C. & Landau, B. & Loupias, C. & Martins, F. & Mathä, T. & Sabbatini, R. & Stahl, H. & Stockman, A., 2005. "The Pricing Behaviour of Firms in the Euro Area: New Survey Evidence," Working papers 135, Banque de France.
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  15. Bilke, Laurent, 2005. "Break in the mean and persistence of inflation: a sectoral analysis of French CPI," Working Paper Series 0463, European Central Bank.
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