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Why Do Prices in Sierra Leone Change So Often? A Case Study Using Micro-level Price Data

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  • Arto Kovanen

Abstract

We use cross-section and time-series techniques to analyze pricing behavior in Sierra Leone. In cross-sectional data, we find that inflation volatility and product diversification are the main factors explaining differences in the frequency of price adjustments. We show that variance in the fraction of prices subject to change is a key determinant of inflation volatility in Sierra Leone, indicating that retail prices are sensitive to economic events. We explain variations in this fraction over time with past inflation and monetary growth, which are important policy variables.

Suggested Citation

  • Arto Kovanen, 2006. "Why Do Prices in Sierra Leone Change So Often? A Case Study Using Micro-level Price Data," IMF Working Papers 06/53, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:06/53
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    8. Apel, Mikael & Friberg, Richard & Hallsten, Kerstin, 2005. "Microfoundations of Macroeconomic Price Adjustment: Survey Evidence from Swedish Firms," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(2), pages 313-338, April.
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    Cited by:

    1. Emmanuel Dhyne & Jerzy Konieczny & Fabio Rumler & Patrick Sevestre, 2009. "Price rigidity in the euro area - An assessment," European Economy - Economic Papers 2008 - 2015 380, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    2. Erwan Gautier, 2009. "Les ajustements microéconomiques des prix : une synthèse des modèles théoriques et résultats empiriques," Revue d'économie politique, Dalloz, vol. 119(3), pages 323-372.
    3. Klenow, Peter J. & Malin, Benjamin A., 2010. "Microeconomic Evidence on Price-Setting," Handbook of Monetary Economics,in: Benjamin M. Friedman & Michael Woodford (ed.), Handbook of Monetary Economics, edition 1, volume 3, chapter 6, pages 231-284 Elsevier.
    4. Ahmad, Yamin S. & Staveley-O’Carroll, Olena M., 2017. "Exploring international differences in inflation dynamics," Journal of International Money and Finance, Elsevier, vol. 79(C), pages 115-135.
    5. Yamin Ahmad & Olena Mykhaylova, 2015. "Exploring International Differences in Inflation Dynamics," Working Papers 15-01, UW-Whitewater, Department of Economics, revised Mar 2017.
    6. Felipe Morandé Lavín & Mauricio Tejada, 2008. "Price Stickiness in Emerging Economies: Empirical Evidence for Four Latin-American Countries," Working Papers wp286, University of Chile, Department of Economics.
    7. Parantap Basu & Shesadri Banerjee, 2015. "Role of IST and TFP Shocks in Business Cycle Fluctuations: The Case of India," CEGAP Working Papers 2015_04, Durham University Business School.
    8. Kadima D. Kalonji & Jan Gottschalk & Ken Miyajima, 2008. "Analyzing Determinants of Inflation When There Are Data Limitation; The Case of Sierra Leone," IMF Working Papers 08/271, International Monetary Fund.

    More about this item

    Keywords

    Prices; Sierra Leone; Inflation; price stickiness; monetary policy; money supply; inflation dynamics; central bank; Inflation And Price Stickiness;

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