Microeconomic Evidence on Price-Setting / Peter J. Klenow, Benjamin A. Malin.

Format:

Book

Author/Creator:

Klenow, Peter J.

Contributor:

National Bureau of Economic Research.

Malin, Benjamin A.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15826.

NBER working paper series no. w15826

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

The last decade has seen a burst of micro price studies. Many studies analyze data underlying national CPIs and PPIs. Others focus on more granular sub-national grocery store data. We review these studies with an eye toward the role of price setting in business cycles. We summarize with ten stylized facts: Prices change at least once a year, with temporary price discounts and product turnover often playing an important role. After excluding many short-lived prices, prices change closer to once a year. The frequency of price changes differs widely across goods, however, with more cyclical goods exhibiting greater price flexibility. The timing of price changes is little synchronized across sellers. The hazard (and size) of price changes does not increase with the age of the price. The cross-sectional distribution of price changes is thick-tailed, but contains many small price changes too. Finally, strong linkages exist between price changes and wage changes.

Notes:

Print version record

March 2010.