Why are Prices Sticky? Preliminary Results from an Interview Study
This paper reports preliminary results from a large research project on business pricing which is currently underway. The idea is to use interviews with actual price setters to assess the validity of a dozen theories of price stickiness. The rather unorthodox (for economists) methodology is defended; the research design is described briefly; and a few results based on the first 72 interviews (out of a projected 200) are presented. This sample suggests that the median firm changes its price annually and that price adjustments typically lag 3-4 months behind shocks to demand or cost.
|Date of creation:||Mar 1991|
|Date of revision:|
|Publication status:||published as American Economic Review, Vol. 81, No. 2, pp.89-96, May 1991.|
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