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- Carlos Viana de Carvalho (2004): The Effects of Heterogeneity in Price Setting on Price and Inflation Inertia
This paper analyzes the implications of heterogeneity in price setting for the real effects of monetary shocks. Starting from otherwise standard sticky price and sticky information models, I introduce ex-ante heterogeneity in terms of price setting frictions, and compare the resulting dynamics with those of identical firms economies under alternative calibrations. ... In particular, reproducing the dynamics of a truly heterogeneous economy with a model based on identical firms requires unrealistically large degrees of price setting frictions.
RePEc:wpa:wuwpma:0412013 Save to MyIDEAS - Michael Reiter & Adrian Wende (2024): Generalized Rotemberg Price-Setting
We propose a generalized Rotemberg pricing scheme which is able to explain important aspects of the observed nonlinear behavior of price adjustment at the macroeconomic level, such as higher pass-through in response to larger shocks, a positive impact of trend inflation on price flexibility, and the relationship between announcement and implementation effects. This is achieved by replacing the linear marginal adjustment cost in Rotemberg pricing by a monotonically increasing, but bounded marginal cost function, specifically some version of a sigmoid function. Conditional on computing a nonlinear model solution, the generalized pricing function is equally tractable as Rotemberg pricing, and equivalent to it for small shocks around a zero-inflation steady state. ... It replicates the effect of trend inflation on the impulse response to money supply shocks that has been established in the literature in a model of logit-price dynamics.
RePEc:ces:ceswps:_11297 Save to MyIDEAS - Carlos Viana de Carvalho (2004): The Effects of Heterogeneity in Price Setting on Price and Inflation Inertia
This paper analyzes the implications of heterogeneity in price setting for both price and inflation inertia. Standard models based on Taylor- or Calvo-style price setting usually assume ex-ante identical firms, while Calvo's approach implies only ex-post heterogeneity. ... In a simple framework, this paper provides analytical results which suggest that ex-ante heterogeneity should have a larger role in models which attempt to understand price and inflation inertia, particularly in low inflation environments
RePEc:ecm:latm04:9 Save to MyIDEAS - Morris, Richard & de Vincent-Humphreys, Rupert (2019): Price-setting behaviour: insights from a survey of large firms
This box summarises the findings of an ad hoc ECB survey of leading euro area companies about their price-setting behaviour, covering various dimensions. ... The frequency of price reviews and changes varies significantly across sectors, with weekly or even daily price changes being common for some retailers, while in some parts of the services sector annual price changes are more typical. Manufacturers tend to review prices monthly but change them only on a quarterly, semi-annual or annual basis. ... When reviewing prices, firms pay most attention to costs and competitor prices, with the latter being particularly important for consumer-facing firms. Many factors contribute to sluggish price adjustment: pricing strategies are based on broadly stable costs and margins, a fear that competitors will not follow suit and, for consumer-oriented firms, a focus on pricing points and an understanding that customers expect prices to remain stable.
RePEc:ecb:ecbbox:2019:0007:4 Save to MyIDEAS - Smolny, Werner (1994): Monopolistic price setting and supply rigidities in a disequilibrium framework
In the paper, a model of the firm with a delayed adjustment of prices and supply is analyzed. Prices and supply are determined under uncertainty about the location of the demand curve. Three models are distinguished: a price setting with predetermined supply, supply determination with predetermined prices, and a simultaneous price and supply determination. It is shown that many of the results of the deterministic case can be transferred to this stochastic model set-up. ... However, the model here allows for supply rigidities and labour hoarding and permits the analysis of price adjustment and rationing situations.
RePEc:zbw:koncil:12 Save to MyIDEAS - Carlsson, Mikael (2014): Selection Effects in Producer-Price Setting
We use micro data on product prices linked to information on the firms that set them to test for selection effects (state dependence) in micro-level producer pricing. In contrast to using synthetic data from a canonical menu-cost model, we fi…nd very weak, if any, micro-level selection effects when running price change probability regressions on actual data. ... Thus, upstream in the supply chain, price-setting is best characterized as time- dependent.
RePEc:hhs:uunewp:2014_006 Save to MyIDEAS - Carlsson, Mikael (2014): Selection Effects in Producer-Price Setting
We use micro data on product prices linked to information on the firms that set them to test for selection effects (state dependence) in micro-level producer pricing. In contrast to using synthetic data from a canonical Menu-Cost model, we find very weak, if any, micro-level selection effects when running price change probability regressions on actual data. ... Thus, upstream in the supply chain, price setting is best characterized by a very low degree of self-selection.
RePEc:hhs:rbnkwp:0290 Save to MyIDEAS - Claudia Kwapil & Fabio Rumler (2006): Price Setting and Inflation Persistence in Austria
On December 15, 2005, the Oesterreichische Nationalbank (OeNB) held a workshop on “Price Setting and Inflation Persistence in Austria.” The aim of this workshop was to discuss the OeNB's recent research results in the field of price dynamics and inflation1 with policymakers and the scientific community. The papers presented at the workshop analyzed the price formation process and the determinants of inflation persistence in Austria from different perspectives and on the basis of various data sources. The first session addressed the degree and determinants of price rigidities at the micro level.
RePEc:onb:oenbmp:y:2006:i:1:b:7 Save to MyIDEAS - David Price & Timothy Sablik & Matthew Wells (2023): Cover Story: How the Pandemic Era Changed Price-Setting
For consumers, the prices of goods and services may seem to emerge from a black box. But behind those prices are complex judgments that firms are making about demand and about the competition, often based on limited information. Pricing decisions may also reflect uncertain assessments of the future costs of inputs. ... While price-setting is challenging even in normal times, shocks during the past few years, such as the pandemic and inflation, have made it harder. How did these changes affect price-setting?
RePEc:fip:fedrrf:97478 Save to MyIDEAS - Virbickas, Ernestas (2010): Wage and price setting behaviour of Lithuanian firms
This paper investigates the wage and price setting behaviour of Lithuanian firms on the basis of an ad hoc survey JEL Classification: D40, J30
RePEc:ecb:ecbwps:20101198 Save to MyIDEAS