Price Rigidity. Evidence from the French CPI Micro-Data

By L. Baudry, Hervé le Bihan, P. Sevestre, S. Tarrieu. Social Science Research Network, 2004

176 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Marketing

View Paper: https://www.semanticscholar.org/paper/ca26ecf5ca98c875a2e292428eef3e06751cd5c8

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

1. P. Sevestre
2. Hervé le Bihan
3. D. Fougère
4. Emmanuel Dhyne
5. Giovanni Veronese

In Marketing

1. Hervé le Bihan
2. Nicole Jonker

Citations in the corpus

• Heterogeneity in Consumer Price Stickiness (2005, methodology): “Heterogeneity in average price durations has recently been documented using individual consumer price data by Bils and Klenow (2004) for the U.”
• Price Setting during Low and High Inflation: Evidence from Mexico (2007, unknown): “…effect did little to prevent the 25Particularly for Spain (Álvarez and Hernando (2006)), Belgium (Aucremanne and Dhyne (2004 and 2005)), France (Baudry et al. (2004)), Portugal (Dias, Dias, and Neves (2004)), Germany (Hoffmann and Kurz-Kim (2006)) and the Netherlands (Jonker et al.…”
• The Patterns and Determinants of Price Setting in the Belgian Industry (2006, unknown): “Because our data set only covers 4 years, we will not assess price rigidity through the direct measurement of the duration of price spells, as has been done in e.g. Aucremanne and Dhyne (2004) or Baudry et al. (2004).”
• THE TRANSMISSION OF MONETARY POLICY IN A MULTISECTOR ECONOMY (2009, unknown): “where n t is the number of hours worked in rm l in sector j: The aggregator (6) allows heterogeneity in sectoral variables while preserving the tractable representative-agent framework.”
• How Frequently Do Consumer Prices Change in Austria? Evidence from Micro CPI Data (2005, unknown): “(3) In other words, these expressions display a " continuous time versions " of an unbiased estimate of the duration of price spells with the assumption of a constant hazard function, i.e. assuming that the probability of a price change is constant over time (see Baudry et al, 2004).”
• Consumer Price Adjustment Under the Microscope: Germany in a Period of Low Inflation (2006, unknown): “This paper supplements studies on consumer price dynamics in Austria (Baumgartner et al 2005), Belgium (Aucremanne/ Dhyne 2004, 2005), in Finland (Vilmunen/Laakkonen, 2005), in France (Baudry et al 2004, Fougère et al 2005), in the Netherlands (Jonker et al 2004), in Italy (Veronese et al 2005), in ”
• Sticky Prices in the Euro Area: A Summary of New Micro Evidence (2006, unknown): “6 See Álvarez and Hernando (2005), Aucremanne and Druant (2004), Fabiani et al. (2004), Hoeberichts and Stokman (2004), Kwapil et al. (2005), Loupias and Ricart (2004), Lünnemann and Mathä (2005b), Martins (2005), Stahl (2005b) and the summary by Fabiani et al (2005).”
• Price Changes in the Euro Area and the United States: Some Facts from Individual Consumer Price Data (2006, methodology): “Source: Databases are described in Baudry, Le Bihan, Sevestre and Tarrieu (2004) and Veronese, Fabiani, Gattulli and Sabbatini (2005).”
• Time-Dependent Versus State-Dependent Pricing: A Panel Data Approach to the Determinants of Belgian Consumer Price Changes (2005, unknown): “…account the heterogeneity of pricing behaviour that has been put forward by former empirical analyses (Álvarez and Hernando (2004), Aucremanne and NBB WORKING PAPER No. 66 - APRIL 2005 31 Dhyne (2004), Baudry et al. (2004), Bils and Klenow (2004), Dias, Dias and Neves (2004), Jonker et al. (2004)).”