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Time-dependent or state-dependent pricing? Evidence from a large devaluation episode

Author

Listed:
  • Celio Feltrin

    (Sao Paulo School of Economics - FGV)

  • Bernardo Guimaraes

    (Sao Paulo School of Economics - FGV
    Centre for Macroeconomics (CFM))

Abstract

State-dependent and time-dependent price setting models yield distinct implications for how frequency and magnitude of price changes react to shocks. This note studies pricing behavior in Brazil following the large devaluation of the Brazilian Real in 1999 to distinguish between models. The results are consistent with state-dependent pricing.

Suggested Citation

  • Celio Feltrin & Bernardo Guimaraes, 2015. "Time-dependent or state-dependent pricing? Evidence from a large devaluation episode," Discussion Papers 1504, Centre for Macroeconomics (CFM).
    • Handle: RePEc:cfm:wpaper:1504
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    References listed on IDEAS

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    1. Ariel Burstein & Martin Eichenbaum & Sergio Rebelo, 2005. "Large Devaluations and the Real Exchange Rate," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 742-784, August.
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    3. Guimaraes, Bernardo & Mazini, Andre & Prince, Diogo de, 2016. "Time-dependent or State-dependent Pricing? Evidence from Firms' Response to Inflation Shocks," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 36(1), March.
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    Cited by:

    1. Barthélémy Bonadio & Andreas M Fischer & Philip Sauré, 2020. "The Speed of Exchange Rate Pass-Through," Journal of the European Economic Association, European Economic Association, vol. 18(1), pages 506-538.
    2. Guimaraes, Bernardo & Mazini, Andre & Prince, Diogo de, 2016. "Time-dependent or State-dependent Pricing? Evidence from Firms' Response to Inflation Shocks," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 36(1), March.

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    More about this item

    Keywords

    State-dependent Pricing; Time-dependent Pricing; Currency Devaluation; Frequency of Price Changes;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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