Firms' inflation expectations and pricing strategies during Covid-19

Marco Bottone (), Cristina Conflitti (), Marianna Riggi () and Alex Tagliabracci
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Marco Bottone: Bank of Italy
Cristina Conflitti: Bank of Italy

No 619, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We use the Bank of Italy's Survey on Inflation and Growth Expectations to explore how the COVID-19 shock affects firms’ pricing policies and their inflation expectations. We find that the longer the time deemed necessary to return to their normal business levels and the greater the attention they pay to their competitors’ pricing policies, the more likely firms are to reduce their own product prices. Moreover, firms' inflation expectations react to the expected persistence of the macroeconomic effects of the shock. We rationalize this evidence through the lens of a general equilibrium model.

Keywords: Covid-19; firms’ inflation expectations; firms' pricing strategies; survey data. (search for similar items in EconPapers)
JEL-codes: E2 E31 E32 I10 (search for similar items in EconPapers)
Date: 2021-06
New Economics Papers: this item is included in nep-mac and nep-mon
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:bdi:opques:qef_619_21

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