Selection Effects in Producer-Price Setting

Mikael Carlsson

No 2014:6, Working Paper Series from Uppsala University, Department of Economics

Abstract: We use micro data on product prices linked to information on the firms that set them to test for selection effects (state dependence) in micro-level producer pricing. In contrast to using synthetic data from a canonical menu-cost model, we fi…nd very weak, if any, micro-level selection effects when running price change probability regressions on actual data. Moreover, when fi…tting a model that nests both time- and state-dependent elements (the CalvoPlus model of Nakamura and Steinsson,2010) to the data, the resulting parameters mimic the standard Calvo (1983) model. Thus, upstream in the supply chain, price-setting is best characterized as time- dependent.

Keywords: Price-setting; Business Cycles; Micro Data (search for similar items in EconPapers)
JEL-codes: D40 E30 L16 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2014-08-19
New Economics Papers: this item is included in nep-ind and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: Selection Effects in Producer-Price Setting (2014)
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