Some Evidence on the Importance of Sticky Prices / Mark Bils, Peter J. Klenow.

Format:

Book

Author/Creator:

Bils, Mark.

Contributor:

National Bureau of Economic Research.

Klenow, Peter J.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9069.

NBER working paper series no. w9069

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

We examine the frequency of price changes for 350 categories of goods and services covering about 70% of consumer spending, based on unpublished data from the BLS for 1995 to 1997. Compared with previous studies we find much more frequent price changes, with half of prices lasting less than 4.3 months. The frequency of price changes differs dramatically across categories. We exploit this variation to ask how inflation for 'flexible-price goods' (goods with frequent changes in individual prices) differs from inflation for 'sticky-price goods' (those displaying infrequent price changes). Compared to the predictions of popular sticky price models, actual inflation rates are far more volatile and transient, particularly for sticky-price goods. The data appendix for this paper can be found at http://www.nber.org/data-appendix/w9069/

Notes:

Print version record

July 2002.