Explaining cross-industry heterogeneity in price stickiness

Luis Alvarez, Pablo Burriel () and Ignacio Hernando

Economics Bulletin, 2011, vol. 31, issue 1, 644-653

Abstract: This note explains cross industry heterogeneity in the frequency of price adjustment. We use the quasi-maximum approach of Papke and Wooldridge (1996) to avoid the shortcomings of OLS regressions to analyse frequencies. We pay particular attention to the role of costs and market competition in explaining cross-industry differences. We find that prices are stickier the higher the labour cost share and the lower are competition and the intermediate input share.

Keywords: producer prices; frequency of price changes; market competition; cost structure (search for similar items in EconPapers)
JEL-codes: D4 E3 (search for similar items in EconPapers)
Date: 2011-02-21
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