Asymmetric price adjustment in the small

Daniel Levy (), Haipeng (Allan) Chen (), Sourav Ray and Mark Bergen
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Sourav Ray: McMaster University [Hamilton, Ontario]
Mark Bergen: Carlson School of Management - UMN - University of Minnesota [Twin Cities] - UMN - University of Minnesota System

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Abstract: Analyses of a large retail scanner price data set reveal a new and surprising regularity – small price increases occur more frequently than small price decreases for price changes of up to 10¢. That is, we find asymmetric price adjustment "in the small." Furthermore, it turns out that inflation offers only a partial explanation for the finding. Indeed, substantial proportion of the asymmetry remains unexplained, even after accounting for the inflation. For example, the asymmetry holds also after excluding periods of inflation from the data, and even for products whose price had not increased. The findings hold for different aggregate and disaggregate measures of inflation and also after allowing for lagged price adjustments.

Keywords: Asymmetric price adjustment; Price rigidity; Inflation; Rational inattention; Monetary Policy (search for similar items in EconPapers)
Date: 2008-05
Note: View the original document on HAL open archive server: https://hal.science/hal-02387498v1
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Citations: View citations in EconPapers (72)

Published in Journal of Monetary Economics, 2008, 55 (4), pp.728-737. ⟨10.1016/j.jmoneco.2008.05.002⟩

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Journal Article: Asymmetric price adjustment in the small (2008)
Journal Article: Asymmetric Price Adjustment in the Small (2008)
Working Paper: Asymmetric Price Adjustment in the Small (2007)
Working Paper: Asymmetric Price Adjustment in the Small (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02387498

DOI: 10.1016/j.jmoneco.2008.05.002

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