Demand or Supply? Price Adjustment during the COVID-19 Pandemic

Almut Balleer, Sebastian Link, Manuel Menkhoff and Peter Zorn ()

No 13568, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study price-setting behavior in German firm-level survey data to infer the relative importance of supply and demand during the Covid-19 pandemic. Supply and demand forces coexist, but demand shortages dominate in the short run. A reported negative impact of Covid-19 on current business is associated with a rise in the probability to decrease prices up to eleven percentage points. These results imply a role for aggregate demand stabilization policy to buffer the economic consequences of Covid-19 while containing the pandemic.

Keywords: producer price setting; supply; demand; COVID-19; fiscal policy (search for similar items in EconPapers)
JEL-codes: D22 E31 E32 E60 H50 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2020-08
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (61)

Published - published as 'Demand or Supply? Price Adjustment Heterogeneity during the Covid-19 Pandemic' in: International Journal of Central Banking, 2024, 20 (1), 93-158, 2024.

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Related works:
Working Paper: Demand or Supply? Price Adjustment during the Covid-19 Pandemic (2020)
Working Paper: Demand or Supply? Price Adjustment during the Covid-19 Pandemic (2020)
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