Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/17868
Authors: 
Levy, Daniel C.
Chen, Haipeng (Allan)
Ray, Sourav
Bergen, Mark
Year of Publication: 
2007
Series/Report no.: 
Kieler Arbeitspapiere 1356
Abstract: 
Analyzing a large weekly retail transaction price dataset, we uncover a surprising regularity?small price increases occur more frequently than small price decreases for price changes of up to about 10 cents, while there is no such asymmetry for larger price changes. The asymmetry holds for the entire sample and for individual categories. We find that while inflation can explain some of the asymmetry, inflation is not the whole story as the asymmetry holds even after excluding inflationary periods from the data, and even for products whose price had not increased over the eight-year period. The findings hold for different measures of inflation and also after allowing for lagged price adjustments. We offer a consumer-based explanation for these findings.
Subjects: 
Asymmetric Price Adjustment
Price Rigidity
JEL: 
D21
D11
L11
M31
E31
D80
Document Type: 
Working Paper

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