Price and Wage Rigidities in the Republic of Macedonia: Survey Evidence from Micro- Level Data

Florian Huber and Magdalena Petrovska ()
Additional contact information
Magdalena Petrovska: National Bank of the Republic of Macedonia

Focus on European Economic Integration, 2015, issue 1, 49-64

Abstract: This paper exploits the information collected from an ad hoc survey conducted on a sample of Macedonian firms to study the extent of nominal price and wage rigidities in the Republic of Macedonia. The research was motivated by the observation that sticky prices influence the responsiveness of inflation to changes in a central bank’s policy rate. Against this background, the paper investigates the relative importance of most determinants of the frequency of price and wage changes identified in the literature. This paper presents a Bayesian analysis of ordinal data. Posterior inference is carried out using Markov Chain Monte Carlo (MCMC) techniques. Infusing the model with prior information allows us to shrink the parameter space, resulting in more precise and reliable parameter estimates. Our results suggest that higher price flexibility is associated with a higher degree of product market competition. Specifically, we find that firms facing high levels of domestic and international competition tend to adjust prices faster.

Keywords: price rigidity; wage rigidity; Bayesian inference; MCMC; survey data (search for similar items in EconPapers)
JEL-codes: D21 E30 J31 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.oenb.at/dam/jcr:19ef4653-92ef-452a-802 ... q1_studies_huber.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbfi:y:2015:i:1:b:3

Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria

Access Statistics for this article

Focus on European Economic Integration is currently edited by Julia Wörz and Elisabeth Beckmann

More articles in Focus on European Economic Integration from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Beckmann ().