Selection Effects in Producer-Price Setting

Mikael Carlsson

No 290, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: 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. Also, fitting a model that nests both time- and state-dependent elements (the CalvoPlus model of Nakamura and Steinsson, 2010), the parameters mimic the standard Calvo (1983) model. Thus, upstream in the supply chain, price setting is best characterized by a very low degree of self-selection.

Keywords: Price-setting; Business Cycles; Micro Data (search for similar items in EconPapers)
JEL-codes: D40 E30 L16 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2014-11-01
New Economics Papers: this item is included in nep-ind and nep-mac
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Working Paper: Selection Effects in Producer-Price Setting (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:rbnkwp:0290

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