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Asymmetries in Price-Setting Behavior: New Microeconometric Evidence from Switzerland

Daniel Kaufmann, Bo Honoré & Sarah Lein

Résumé In this paper, we follow the recent empirical literature that has specified reduced-form models for price setting that are closely tied to (S, s)-pricing rules. Our contribution to the literature is twofold. First, we propose an estimator that relaxes distributional assumptions on the unobserved heterogeneity. Second, we use the estimator to examine the prevalence of positive price changes in a low-inflation environment. Our model estimates suggest that, if inflation falls from 0.9% to zero, the share of positive price changes in all price changes falls from 63.6% to 56.2%.
   
Mots-clés Asymmetric price adjustment, menu costs, front loading, heterogeneity, CPI micro data, panel data
   
Citation Kaufmann, D., Honoré, B., & Lein, S. (2012). Asymmetries in Price-Setting Behavior: New Microeconometric Evidence from Switzerland. Journal of Money, Credit and Banking, 44(S2), 211-236.
   
Type Article de périodique (Anglais)
Date de publication 18-12-2012
Nom du périodique Journal of Money, Credit and Banking
Volume 44
Numéro S2
Pages 211-236
URL https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1538-46...