Temporal Distribution of Price Changes: Staggering in the Large and Synchronization in the Small
Emmanuel Dhyne () and
No 116, Working Paper Research from National Bank of Belgium
Temporal distribution of individual price changes is of crucial importance for business cycle theory and for the micro-foundations of price adjustment. While it is routinely assumed that price changes are staggered over time, both theory and evidence are ambiguous. We use a large Belgian data set to analyze whether price changes are staggered or synchronized. We find that the more aggregate the data, the closer the distribution to perfect staggering. This result holds for both aggregation across goods and across locations. Our results provide support for Bhaskar’s (2002) model of synchronized adjustment within, and staggered adjustment across, industries.
Keywords: staggering; synchronization; aggregation; price setting (search for similar items in EconPapers)
JEL-codes: E31 L16 D21 L11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba and nep-mac
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Working Paper: Temporal Distribution of Price Changes: Staggering in the Large and Synchronization in the Small (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:nbb:reswpp:200706-02
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