Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152818
Authors: 
Baudry, Laurent
Le Bihan, Hervé
Sevestre, Patrick
Tarrieu, Sylvie
Year of Publication: 
2004
Series/Report no.: 
ECB Working Paper 384
Abstract: 
Based upon a large fraction of the price records used for computing the French CPI, we document consumer price rigidity in France. We first provide a methodological discussion of issues involved in estimating average price duration with micro-data. The average duration of prices in the sectors covered by the database (65% of CPI) is then found to be around 8 months. A strong heterogeneity across sectors both in the average duration of prices and in the pattern of price setting is reported. There is no clear evidence of downward nominal rigidity, since price cuts are almost as frequent as price rises. Moreover, the average size of a change in price is quite large in both cases. Overall, while our results do not entail a clear conclusion about the existence of menu costs, there is evidence of both time-dependent and state-dependent price setting behaviors by retailers.
Subjects: 
consumer price index
duration of prices
frequency of price change
Price stickiness
JEL: 
E31
D43
L11
Document Type: 
Working Paper

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