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

Huw Dixon and Christian Grimme

No 7842, CESifo Working Paper Series from CESifo

Abstract: We take a monthly panel of German firms over the period 1980–2017 to examine the relative importance of time and state dependence in the decisions of firms to raise, lower or leave their price constant. In addition, we seek to estimate the relative importance of macroeconomic factors and firm-specific factors within state dependence. While price decreases can be well explained by time dependence alone, price increases are best predicted by the interaction of time-dependent and firm-specific state factors. Whilst on their own macroeconomic variables might seem important, once we add firm-specific variables the effects of macroeconomic variables become much smaller in magnitude. Our empirical results suggest that theoretical models should integrate both time and state dependence rather than developing the approaches separately. We also show that time dependence is better captured if we allow for different hazard functions for price increases and decreases.

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)
Date: 2019
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp7842.pdf (application/pdf)

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 (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7842

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().