Price adjustment in open economies

Torben Andersen and Niels Hansen

Open Economies Review, 1995, vol. 6, issue 4, 303-321

Abstract: The adjustment of product prices in open economies is analyzed by use of a model encompassing different product market structures and quarterly data for Denmark, Germany, the Netherlands, Norway, and Sweden. In general, support is found in favor of a specialized production model implying that prices are affected by internal and external factors. Price adjustment displays substantial inertia and is in the short run driven by real shocks to both supply and demand, as well as being characterized by nominal rigidities, whereas in the long run relative prices are driven solely by supply variables. Copyright Kluwer Academic Publishers 1995

Keywords: price adjustment; foreign competition; nominal rigidities (search for similar items in EconPapers)
Date: 1995
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DOI: 10.1007/BF01000385

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