Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/279270.2 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 10520
Version Description: 
This Version: August 2025
Publisher: 
CESifo GmbH, Munich
Abstract: 
This paper uses a new survey approach to empirically characterize firm-level passthrough dynamics and explores them in a price-setting model. We directly elicit price pass-through of cost shocks in the field and survey experiments. We find gradual pass-through due to infrequent adjustments (nominal rigidities) and high costs of deviating from competitors (strategic complementarities), especially for transitory shocks. The experiments provide causal evidence supporting non-constant demand elasticities: firms raise prices incrementally to a permanent aggregate shock, and samesize idiosyncratic shocks exhibit lower pass-through. We quantify nominal rigidities and strategic complementarities in a general equilibrium price-setting model, finding both play substantial roles.
Subjects: 
pass-through
cost shocks
heterogeneous expectations
firm survey
nominal rigidities
strategic complementarities
JEL: 
E24
E31
E50
E60
Document Type: 
Working Paper
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2 10419/279270.2 This Version: August 2025
1 10419/279270 Original Version: June 2023

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