Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152975
Authors: 
Lünnemann, Patrick
Mathä, Thomas Y.
Year of Publication: 
2005
Series/Report no.: 
ECB Working Paper 541
Abstract: 
This paper uses micro-level price data and analyses the behaviour of consumer prices in Luxembourg. We find that the median duration of consumer prices is roughly 8 months. The median durations of energy and unprocessed food are about 1.5 and 5 months, while prices of services typically change fewer than once a year. For some product types, such as non-energy industrial goods and processed food, a relatively large share of the observed price changes is reverted afterwards. With the exception of services, individual prices do not show signs of downward rigidity. On average, price decreases are as large as price increases. Price changes are determined both by state- and time-dependent factors. Accumulated price and wage inflation, wage adjustment due to indexation, the cash changeover and a larger number of competitors increase the probability of a price change, while pricing at attractive pricing points and price regulation have the opposite effect.
Subjects: 
consumer prices
price setting
rigidity
sales
wage indexation
JEL: 
E31
C23
C41
Document Type: 
Working Paper

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