Price-Setting Behaviour in Switzerland Evidence from CPI Micro Data

No 2008-15, Working Papers from Swiss National Bank

Abstract: This paper investigates price-setting behaviour of firms based on the individual price quotes underlying the Swiss consumer price index. The data set covers the years from 1993 to 2005. Six main findings emerge from the analysis. (i) Prices are sticky; the median duration amounts to 4.6 quarters. (ii) Price-setting behaviour is heterogeneous across sectors and outlet characteristics. (iii) Price changes are sizeable; the median absolute size amounts to 9.4%. (iv) There is no indication of general downward price stickiness; even in the case of positive inflation, 41.3% of all price adjustments are decreases and the distributions of price changes do not show substantial asymmetries. (v) Firms respond to expected cost shocks at the date of their occurrence; VAT rate changes do not lead to more price adjustments before they take effect. (vi) There is some evidence that firms adjust their behaviour according to the state of the economy; in particular, firms facing higher rates of inflation adjust prices more frequently.

Keywords: Price-setting; frequency of price changes; nominal price rigidity; time-dependent pricing; state-dependent pricing (search for similar items in EconPapers)
JEL-codes: D40 E31 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2008
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Citations: View citations in EconPapers (8)

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Journal Article: Price-Setting Behaviour in Switzerland: Evidence from CPI Micro Data (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:snb:snbwpa:2008-15

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