 Belief-Dependent Pricing DecisionsSerafin Frache (), Rodrigo Lluberas and Javier Turen No 2101, Documentos de Trabajo/Working Papers from Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. Abstract: This paper studies the e ects of in ation and idiosyncratic cost expectations on rms price-adjusting decisions. Evidence of price-settings frictions using micro data has been studied through the lens of both time-dependent and state-dependent models. Using data from a unique survey, we argue that priceadjustment decisions are also belief-dependent. While controlling for time- and state-dependent factors, we nd that, for the extensive margin of price-changes, expectations of in ation do not play any role, but rms beliefs about their overall costs do. The expectation channel is, however, heterogeneous across rms, driven exclusively by large companies, and operates with a delay. Nonetheless, when looking at rms beliefs about the intensive margin of price-changes, besides costs, the relevance of current in ation expectations is recovered. Our evidence supports the presence of price rigidities at the rm level but is also consistent with theories of limited attention. Keywords: inflation expectations; cost expectations; firm surveys; price adjustments (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mnt:wpaper:2101 Access Statistics for this paper More papers in Documentos de Trabajo/Working Papers from Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. Contact information at EDIRC. |
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