Price changes in Finland: some evidence from micro CPI data

Samu Kurri ()
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Samu Kurri: Bank of Finland, Monetary Policy and Research, PO Box 160, FI-00101 Helsinki, Finland., http://www.bof.fi/en/julkaisut/index.htm

No 728, Working Paper Series from European Central Bank

Abstract: In this paper we analyse the Finnish consumer price changes from February 1997 to December 2004 on the basis of a set of microdata which covers over half of the items included in the Finnish CPI. Our findings can be summarised with four stylised facts. Firstly, only a small fraction of prices change monthly. In the period under review, an average 80% of prices remained unchanged in consecutive months. Secondly, price changes can be large in both directions. Thirdly, positive inflation is due to the higher number of price increases compared to decreases, and the magnitude of price changes is more or less in balance. Finally, the decomposition of monthly inflation to the weighted fraction of products with price changes and the weighted average of those price changes seems to give support for the time-dependent modelling of Finnish consumer prices, although signs of state-dependent pricing can also be found in the data. JEL Classification: E31, D40, L11.

Keywords: consumer prices; rigidity; time-dependent pricing; state-dependent pricing. (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mac
Date: Written 2007-02
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