Stuck at Zero: Price Rigidity in a Runaway Inflation

Daniel Levy (), Avichai Snir and Haipeng (Allan) Chen ()

No 2021-01, Working Papers from Bar-Ilan University, Department of Economics

Abstract: We use micro level retail price data from convenience stores to study the link between 0-ending price points and price rigidity during a period of a runaway inflation, when the annual inflation rate was in the range of 60%–430%. Surprisingly, we find that 0-ending prices are less likely to adjust, and when they do adjust, the average adjustments are larger. These findings suggest that price adjustment barriers associated with round prices are strong enough to cause a systematic delay in price adjustments even in a period of a runaway inflation, when 85 percent of the prices change every month.

Pages: 25 pages
Date: 2021-04
New Economics Papers: this item is included in nep-isf, nep-mac and nep-mon
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Stuck at zero: Price rigidity in a runaway inflation (2021)
Journal Article: Stuck at Zero: Price Rigidity in a Runaway Inflation (2021)
Working Paper: Stuck at Zero: Price Rigidity in a Runaway Inflation* (2021)
Working Paper: Stuck at Zero: Price Rigidity in a Runaway Inflation (2021)
Working Paper: Stuck at Zero: Price Rigidity in a Runaway Inflation (2021)
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