Price Rigidity: A Survey of Evidence From Micro-Level Data

Roland Clairmonte Craigwell (), Winston Ricardo Moore (), Diego Morris and DeLisle Worrell

MPRA Paper from University Library of Munich, Germany

Abstract: Over the last decade or more micro price studies have proliferated. In this paper a survey of this literature reveals alternative theoretical explanations of sticky prices: (a) sellers review and change prices only at predetermined intervals (except under extraordinary circumstances), so that any price reaction appears only when that time arrives (referred to as “time dependent pricing”); or (b) prices are always reviewed after a shock or policy move (“state dependent pricing”), but may be altered only if the difference between the actual and the new target price is sufficient to warrant an adjustment. The empirical evidence is that prices take longer to change in developed countries than in developing economies. In addition, the frequency of price movements differs widely across goods and the timing of price changes is not synchronized across sellers.

Keywords: Price Rigidity; Consumer Prices; Inflation, Survey data (search for similar items in EconPapers)
JEL-codes: D40 L1 E3 C4 (search for similar items in EconPapers)
Date: 2011
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