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Consumer price behaviour in Luxembourg: evidence from micro CPI data

Patrick Lünnemann () and Thomas Mathä ()

No 17, BCL working papers from Central Bank of Luxembourg

Abstract: This paper uses micro-level price data and analyses the behaviour of consumer prices in Luxembourg. We find that the median duration of consumer prices is roughly 8 months. The median durations of energy and unprocessed food are about 1.5 and 5 months, while prices of services typically change fewer than once a year. For some product types, such as non-energy industrial goods and processed food, a relatively large share of the observed price changes is reverted afterwards. With the exception of services, individual prices do not show signs of downward rigidity. On average, price decreases are as large as price increases. Price changes are determined both by state- and time-dependent factors. Accumulated price and wage inflation, wage adjustment due to indexation, the cash changeover and a larger number of competitors increase the probability of a price change, while pricing at attractive pricing points and price regulation have the opposite effect

Keywords: Price setting; consumer prices; rigidity; wage indexation; sales (search for similar items in EconPapers)
JEL-codes: E31 C23 C41 (search for similar items in EconPapers)
Date: 2005-11
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Published as ?Consumer price behaviour: evidence from Luxembourg micro data? in Managerial and Decision Economics, 2010, 31: 177-192

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http://www.bcl.lu/fr/Recherche/publications/cahiers_etudes/17/BCLWP017.pdf (application/pdf)

Related works:
Journal Article: Consumer price behaviour: evidence from Luxembourg micro data (2010) Downloads
Working Paper: Consumer price behaviour in Luxembourg: evidence from micro CPI data (2005) Downloads
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