How Frequent Are Small Price Changes?

Martin Eichenbaum, Nir Jaimovich, Sergio Rebelo () and Josephine Smith

American Economic Journal: Macroeconomics, 2014, vol. 6, issue 2, 137-55

Abstract: Recent empirical work suggests that small price changes are relatively common. This evidence has been used to criticize classic menu-cost models. In this paper, we use scanner data from a national supermarket chain and micro data from the Consumer Price Index to reassess the importance of small price changes. We argue that the vast majority of these changes are due to measurement error. We conclude that the evidence on the prevalence of small price changes is much too weak to be used as a litmus test of nominal rigidity models.

JEL-codes: C82 E31 L11 L81 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mac.6.2.137
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Citations: View citations in EconPapers (70)

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Working Paper: How Frequent Are Small Price Changes? (2012)
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