Demand or Supply? Price Adjustment Heterogeneity during the COVID-19 Pandemic

Almut Balleer, Sebastian Link, Manuel Menkhoff and Peter Zorn ()
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Almut Balleer: RWI Essen, TU Dortmund, IIES Stockholm, CESifo, and CEPR

International Journal of Central Banking, 2024, vol. 20, issue 1, 93-157

Abstract: We study price-setting behavior and subjective perceptions in German firm-level survey data to infer the relative importance of supply and demand during the COVID-19 pandemic. Demand shortages dominate at the onset of the pandemic. A reported negative impact of COVID-19 on current business is associated with a rise in the probability to decrease prices up to 10 percentage points in this episode. Supply forces gain in importance during the ensuing sudden surge in inflation and firms perceive goods supply shortages as most restrictive. Firms adversely affected during the early inflation decline show no higher probability of price increases. Journal: International Journal of Central Banking

JEL-codes: D22 E31 E32 E60 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ijc:ijcjou:y:2024:q:1:a:3

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