Price rigidity in Europe and the US: A comparative analysis using scanner data
B. Verhelst () and
Dirk Van den Poel ()
Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium from Ghent University, Faculty of Economics and Business Administration
This paper uses scanner data from two large retailers to offer new insights into the extent of price rigidity in Europe and the US. Recent empirical research in this field has made extensive use of monthly data to study price stickiness and to control for the impact of temporary sales. We show that the use of monthly data is potentially highly misleading. We employ scanner data in (bi)weekly frequency and highlight the importance of high frequency data in studying price rigidity. Regular prices show roughly the same degree of flexibility in Europe and the US, in line with recent empirical research, when we study monthly price series derived from our high frequency scanner data. This finding collapses, however, when the original scanner datasets in higher base frequency are examined. Regular prices are then far more flexible in the US than in Europe. This result is robust to the type of sales filter that we apply and the statistic used to capture price rigidity.
Keywords: price setting; scanner data; frequency of price change; sales filtering (search for similar items in EconPapers)
JEL-codes: C33 D4 E3 L66 (search for similar items in EconPapers)
Pages: 32 pages
New Economics Papers: this item is included in nep-cba, nep-cis, nep-hme and nep-mon
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Working Paper: Price Rigidity in Europe and the US: A Comparative Analysis Using Scanner Data (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:rug:rugwps:10/684
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