Logit price dynamics

James Costain and Anton Nakov

No 1693, Working Paper Series from European Central Bank

Abstract: We model retail price stickiness as the result of errors due to costly decision-making. Under our assumed cost function for the precision of choice, the timing of price adjustments and the prices firms set are both logit random variables. Errors in the prices firms set help explain micro JEL Classification: E31, D81, C73

Keywords: information-constrained pricing; logit equilibrium; near rationality; nominal rigidity; state-dependent pricing (search for similar items in EconPapers)
Date: 2014-07
New Economics Papers: this item is included in nep-com, nep-dcm and nep-mac
Note: 3308697
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.ecb.europa.eu//pub/pdf/scpwps/ecbwp1693.pdf (application/pdf)

Related works:
Journal Article: Logit Price Dynamics (2019)
Working Paper: Logit Price Dynamics (2015)
Working Paper: Logit Price Dynamics (2014)
Working Paper: Logit price dynamics (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20141693

Access Statistics for this paper

More papers in Working Paper Series from European Central Bank 60640 Frankfurt am Main, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Official Publications ().