Time-Dependency in Producers’ Price Adjustments: Evidence from Micro Panel Data
Øivind Nilsen (),
Pettersen Per Marius () and
Bratlie Joakim ()
Additional contact information
Bratlie Joakim: Department of Economics, Norwegian School of Economics, N-5045, Bergen, Norway
Review of Economics, 2018, vol. 69, issue 2, 147-168
Existing micro evidence of firms’ price changes tends to show a downward sloping hazard rate – the longer the price of a product has remained the same, the less likely it is that the price will change. Using a panel of Norwegian plant- and product-specific prices, we also find a downward sloping hazard when applying a Kaplan–Meier model. After having controlled for both observed and unobserved characteristics, we find flat hazards with spikes in the first and twelfth months. This suggests time-dependent price-setting by at least some of the producers. The spike after 12 months might be explained by seasonal demand effects, but also by the pricing season effect related to information acquisition and processing, negotiation and signing of price contracts. The revealed price adjustment pattern is at odds with the predictions of the Calvo model, a central element in many dynamic stochastic general equilibrium models, as this assumes constant frequencies of price adjustments over time. Our empirical findings instead point to a modified Calvo model where firms in some periods experience lower menu costs. Finally, the empirical findings may have implications for the effectiveness of monetary policy interventions.
Keywords: price-setting; micro data (search for similar items in EconPapers)
JEL-codes: E31 D22 C41 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://www.degruyter.com/view/j/roe.2018.69.issue ... -0012.xml?format=INT (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.
Working Paper: Time-Dependency in Producers' Price Adjustments: Evidence from Micro Panel Data (2018)
Working Paper: Time-Dependency in Producers’ Price Adjustments: Evidence from Micro Panel Data (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:lus:reveco:v:69:y:2018:i:2:p:147-168:n:2
Ordering information: This journal article can be ordered from
Access Statistics for this article
Review of Economics is currently edited by Michael Berlemann
More articles in Review of Economics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().