State-Dependent or Time-Dependent Pricing? New Evidence from a Monthly Firm-Level Survey: 1980 2017

Huw Dixon and Christian Grimme ()
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Christian Grimme: Leibniz Institute for Economic Research at the University of Munich and CESifo, https://sites.google.com/site/econgrimme/

No E2021/1, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

Abstract: We examine the relative importance of time and state dependence in the price-setting decisions of firms using a monthly panel of German firms over the period 1980 2017. We propose a re?ned version of time dependence by introducing di?erent hazard functions for price increases and decreases. We ?nd three sets of results. First, time dependence is much more important for price setting than what the previous literature has found. Second, price decreases can be well explained by time dependence alone. Price increases are best predicted by the interaction of time-dependent and ?rm-speci?c state factors. Third, time dependence for price increases and decreases look completely di?erent from each other. Our empirical results suggest that theoretical models should integrate both time and state dependence rather than developing the approaches separately.

Keywords: Survey Data; Price Setting; Extensive Margin; State-Dependent Pricing; Time-Dependent Pricing (search for similar items in EconPapers)
JEL-codes: E30 E31 E32 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2021-01
New Economics Papers: this item is included in nep-bec and nep-mac
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: State-dependent or time-dependent pricing? New evidence from a monthly firm-level survey: 1980–2017 (2022)
Working Paper: State-Dependent or Time-Dependent Pricing? New Evidence from a Monthly Firm-Level Survey: 1980-2017 (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cdf:wpaper:2021/1

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