Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144258
Authors: 
Aucremanne, Luc
Dhyne, Emmanuel
Year of Publication: 
2004
Series/Report no.: 
Working Paper Research 44
Abstract: 
This paper examines the degree of price rigidity in Belgian consumer prices, using a large database. As to the observed degree of rigidity, the results reveal a substantial amount of heterogeneity, not only across but also within product categories. While prices turn out to be perfectly flexible for some product categories, they tend to be very sticky for others. Each month, nearly 17 p.c. of the consumer prices change on average and the median duration of a price spell is close to 13 months. A substantial subset of our results is compatible with state-dependent pricing, while other results suggest that some timedependency exists as well. The majority of price changes are price increases, but price decreases are not uncommon, except for services. The size of price changes is important. Price changes do not seem to be highly synchronised across price-setters within relatively homogenous product categories.
Subjects: 
consumer prices
price rigidity
state-dependent pricing
time-dependent pricing
staggered pricing
JEL: 
D21
D40
E31
Document Type: 
Working Paper

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