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Temporal Distribution of Price Changes : Staggering in the Large and Synchronization in the Small

  • Emmanuel Dhyne

    ()

    (National Bank of Belgium, Research Department
    Centre de Recherche Warocqué, Université de Mons-Hainaut)

  • Jerzy Konieczny

    ()

    (Department of Economics, Wilfrid Laurier University, Waterloo, Ont., Canada)

Temporal distribution of individual price changes is of crucial importance for business cycle theory and for the micro-foundations of price adjustment. While it is routinely assumed that price changes are staggered over time, both theory and evidence are ambiguous. We use a large Belgian data set to analyze whether price changes are staggered or synchronized. We find that the more aggregate the data, the closer the distribution to perfect staggering. This result holds for both aggregation across goods and across locations. Our results provide support for Bhaskar’s (2002) model of synchronized adjustment within, and staggered adjustment across, industries.

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Paper provided by National Bank of Belgium in its series Working Paper Research with number 116.

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Length: 52 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:nbb:reswpp:200706-02
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