Price and Quantity Responses to Cost and Demand Shocks

Paul Geroski and Stephen Hall

Oxford Bulletin of Economics and Statistics, 1995, vol. 57, issue 2, 185-204

Abstract: When prices are inflexible, real variables like production and inventories must bear the brunt of responding to cost and demand shocks. In these circumstances, one expects to observe rather more variation in quantities than in prices, and that is, in fact, what we observe in the data. To explain this observation, one must explain why prices are inflexible. Our goal in this paper is to ascertain whether it is selectively in response to demand shocks or just a more extensive smoothing of prices than quantities which accounts for the relatively higher variation in quantities which we observe. We conclude that selectively in response is clearly evident in the data: demand shocks have only very week effects on prices, but they have substantial (if rather transitory) effects on quantities. Copyright 1995 by Blackwell Publishing Ltd

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:bla:obuest:v:57:y:1995:i:2:p:185-204

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0305-9049

Access Statistics for this article

Oxford Bulletin of Economics and Statistics is currently edited by Christopher Adam, Anindya Banerjee, Christopher Bowdler, David Hendry, Adriaan Kalwij, John Knight and Jonathan Temple

More articles in Oxford Bulletin of Economics and Statistics from Department of Economics, University of Oxford Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().