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Evidence from Surveys of Price-Setting Managers: Policy Lessons and Directions for Ongoing Research

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  • Gaspar, Vitor
  • Levin, Andrew
  • Smets, Frank
  • Martins, Fernando Manuel

Abstract

Understanding the features and the determinants of individual price setting behaviour is important for the formulation of monetary policy. These behavioural mechanisms play a fundamental role in influencing the characteristics of aggregate inflation and in determining how monetary policy affects inflation and real economic activity. The Inflation Persistence Network, a collaborative research effort of the Eurosystem, analysed a large number of panel data sets of individual price records and conducted surveys of price-setting managers in many euro area countries. This paper discusses to what extent the extensive evidence coming from those two data sources provides support for some basic elements of the New Keynesian perspective. It analyses the implications of the micro evidence for distinguishing between competing theories of price stickiness and provides some brief reflections about the lessons for monetary policy.

Suggested Citation

  • Gaspar, Vitor & Levin, Andrew & Smets, Frank & Martins, Fernando Manuel, 2007. "Evidence from Surveys of Price-Setting Managers: Policy Lessons and Directions for Ongoing Research," CEPR Discussion Papers 6227, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:6227
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    Cited by:

    1. Bartosz Mackowiak & Frank Smets, 2008. "On implications of micro price data for macro models," Conference Series ; [Proceedings], Federal Reserve Bank of Boston.
    2. Thorvardur Tjörvi Ólafsson & Ásgerdur Pétursdóttir & Karen Á. Vignisdóttir, 2011. "Price setting in turbulent times," Economics wp54, Department of Economics, Central bank of Iceland.
    3. Carlos Usabiaga & Diego Romero-Ávila, 2012. "New Disaggregate Evidence on Spanish Inflation Persistence," EcoMod2012 3800, EcoMod.
    4. Diego Romero-Ávila & Carlos Usabiaga, 2012. "Disaggregate evidence on Spanish inflation persistence," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 3029-3046, August.

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    More about this item

    Keywords

    Monetary policy; New keynesian models; Price setting; Price stickiness;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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