Why are Prices Sticky? Preliminary Results from an Interview Study

Alan S. Blinder

No 3646, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper reports preliminary results from a large research project on business pricing which is currently underway. The idea is to use interviews with actual price setters to assess the validity of a dozen theories of price stickiness. The rather unorthodox (for economists) methodology is defended; the research design is described briefly; and a few results based on the first 72 interviews (out of a projected 200) are presented. This sample suggests that the median firm changes its price annually and that price adjustments typically lag 3-4 months behind shocks to demand or cost.

Date: 1991-03
Note: EFG
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