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Price Setting in Lithuania: More Evidence from the Survey of Firms

Author

Listed:
  • Ernestas Virbickas

    () (Bank of Lithuania)

Abstract

The paper examines price setting in Lithuania based on ad hoc survey of the Bank of Lithuania “On Price and Wage Setting”. The study extends the survey data analysis presented in Virbickas (2009). The paper points to the incidence of both the time-dependent and the state-dependent price reviewing policies used by the investigated firms, though the price reviewing practices appear to be somewhat tilted to the state-dependent pricing. Analysis provides evidence on the reasons for upward and downward stickiness of prices. Delayed price adjustment is found to be mostly related to the price adjustment stage rather than the price reviewing stage. The most momentous explanations for not adjusting prices upwards or downwards rest on the cost-based pricing and the explicit contracts. The study finds an asymmetric influence of some of the price factors. In particular, the cost factors are found to be decisive in invoking the price increase rather than the price decrease.

Suggested Citation

  • Ernestas Virbickas, 2011. "Price Setting in Lithuania: More Evidence from the Survey of Firms," Bank of Lithuania Working Paper Series 11, Bank of Lithuania.
  • Handle: RePEc:lie:wpaper:11
    as

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    File URL: http://www.lb.lt/en/publications/no-11-price-setting-in-lithuania-more-evidence-from-the-survey-of-firms
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    References listed on IDEAS

    as
    1. Warmedinger, Thomas & Vetlov, Igor, 2006. "The German block of the ESCB multi-country model," Working Paper Series 654, European Central Bank.
    2. Konstantins Benkovskis & Dainis Stikuts, 2006. "Latvia's Macroeconomic Model," Working Papers 2006/02, Latvijas Banka.
    3. Vetlov, Igor, 2004. "The lithuanian block of the ECSB multi-country model," BOFIT Discussion Papers 13/2004, Bank of Finland, Institute for Economies in Transition.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    price review; price adjustment; price stickiness;

    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)

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