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Sticky Prices and Moderate Inflation

  • Marc Hofstetter

    ()

Recent evidence shows that there is great heterogeneity in the price setting frequency across sectors, and that those changing prices frequently do so even under low inflation. What happens to price setting strategies of sticky price goods under moderate inflation? We built a dataset of monthly newspaper and magazine prices for Colombia, for the period 1960-2005, an exceptional example of prolonged moderate inflation. Within this macroeconomic scenario, and the novel database, we study the frequency of price adjustment, the relative importance of time- and state-dependent theories, and their evolution as inflation declined from moderate rates to single digits.

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File URL: http://economia.uniandes.edu.co/publicaciones/dcede2008-20.pdf
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Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 005856.

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Length: 30
Date of creation: 30 Sep 2008
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Handle: RePEc:col:000089:005856
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