The Pricing Behaviour of UK Firms

Nicoletta Batini, Brian Jackson and Stephen Nickell

No 9, Discussion Papers from Monetary Policy Committee Unit, Bank of England

Abstract: Industrial prices of goods and services are a function of costs of production and of the mark-up that firms apply on those costs. If these prices relate to goods that are traded internationally, they will also be influenced by the price at which those goods are exchanged in international markets. In this paper we present two models of industry pricing behaviour and confront them with UK sectoral data, by estimating the theoretically derived pricing equations using an input-output table at basic prices prepared by Cambridge Econometrics and employment and wage data from the New Earnings Survey. The model based on Bils (1987) and Hall (1988) and which was originally devised for industries within the US manufacturing sector appears to fit the data only marginally better than the one which is based on a structural dynamic pricing equation from Batini, Jackson and Nickell (2000). In both models, sectoral domestic prices depend on marginal costs and sectoral world prices in domestic currency. We find that, in this respect, the weight attached to world prices is significantly correlated with the degree of openness of the industry.

Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.bankofengland.co.uk/publications/extern ... /extmpcpaper0009.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.bankofengland.co.uk/publications/externalmpcpapers/extmpcpaper0009.pdf [301 Moved Permanently]--> https://www.bankofengland.co.uk/publications/externalmpcpapers/extmpcpaper0009.pdf)

Related works:
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:mpc:wpaper:09

Access Statistics for this paper

More papers in Discussion Papers from Monetary Policy Committee Unit, Bank of England Contact information at EDIRC.
Bibliographic data for series maintained by Bank of England Website ().