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Price setting in South Africa 2001-2007 - stylised facts using consumer price micro data

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  • Creamer, Kenneth
  • Rankin, Neil A.

Abstract

Inflation, a macroeconomic variable, is underpinned by microeconomic data. This paper uses a large microdata sample at the unit level of South Africa’s Consumer Price Index (CPI) for the period 2001m12 to 2007m12 to begin to understand price setting conduct in South Africa. An understanding of price setting conduct is important since macroeconomic models, used for monetary policy, often incorporate estimates of pricing conduct. Often these estimates are not based on rigorous analysis of the underlying data. The dataset used in this paper allows for the following to be calculated: the frequency of price changes, the frequency of price increases and price decreases, findings on the magnitude of price changes, price increases and price decreases, and findings on the duration of prices, and thus provides a more accurate estimate on pricing conduct than has been previously available for South Africa. Results are presented at both an aggregate and a disaggregated level, based on the CPI’s major product categories and show the heterogeneous nature of price changes within the South African economy. These South African results are compared briefly to the results for other countries, where such micro level price data analysis has been undertaken. The study is part of a broader research effort into the implications of price setting conduct for monetary policy in South Africa, including an analysis of time- and state-dependent factors influencing the frequency and magnitude of price changes.

Suggested Citation

  • Creamer, Kenneth & Rankin, Neil A., 2008. "Price setting in South Africa 2001-2007 - stylised facts using consumer price micro data," MPRA Paper 16905, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:16905
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    File URL: https://mpra.ub.uni-muenchen.de/16905/1/MPRA_paper_16905.pdf
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    References listed on IDEAS

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    10. Fabrizio Coricelli & Roman Horvath, 2008. "Price Setting And Market Structure: An Empirical Analysis Of Micro Data," William Davidson Institute Working Papers Series wp938, William Davidson Institute at the University of Michigan.
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    Citations

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    Cited by:

    1. Rafael Portillo & Luis-Felipe Zanna & Stephen O’Connell & Richard Peck, 2016. "Implications of food subsistence for monetary policy and inflation," Oxford Economic Papers, Oxford University Press, vol. 68(3), pages 782-810.
    2. Alvarez González, Luis Julián, 2008. "What Do Micro Price Data Tell Us on the Validity of the New Keynesian Phillips Curve?," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 2, pages 1-36.
    3. Prasad, Eswar & Zhang, Boyang, 2015. "Distributional Effects of Monetary Policy in Emerging Market Economies," IZA Discussion Papers 9272, Institute for the Study of Labor (IZA).
    4. Anand, Rahul & Prasad, Eswar S. & Zhang, Boyang, 2015. "What measure of inflation should a developing country central bank target?," Journal of Monetary Economics, Elsevier, vol. 74(C), pages 102-116.
    5. ALIDOU, Sahawal, 2014. "Degree of price rigidity in LICs and implication for monetary policy," MPRA Paper 59844, University Library of Munich, Germany.
    6. Janine Aron & Kenneth Creamer & John Muellbauer & Neil Rankin, 2014. "Exchange Rate Pass-Through to Consumer Prices in South Africa: Evidence from Micro-Data," Journal of Development Studies, Taylor & Francis Journals, vol. 50(1), pages 165-185, January.
    7. 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.
    8. Mamello Amelia Nchake & Lawrence Edwards & Neil Rankin, 2015. "Price-Setting Behaviour in Lesotho: Stylised Facts from Consumer Retail Prices," South African Journal of Economics, Economic Society of South Africa, vol. 83(2), pages 199-219, June.
    9. M. Utku Ozmen & Orhun Sevinc, 2011. "Price Rigidity In Turkey : Evidence From Micro Data," Working Papers 1125, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    10. Franz Ruch & Neil Rankin & Stan du Plessis, 2016. "Working Paper – WP/16/06- Decomposing inflation using micro-price-level data- South Africa’s pricing dynamics," Papers 7353, South African Reserve Bank.

    More about this item

    Keywords

    Inflation; price setting; South Africa; consumer price index;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General

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