Rigid prices: evidence from U.S. scanner data
Abstract: This paper uses over two years of weekly scanner data from two small US cities to characterize time and state dependence of grocers' pricing decisions. In these data, the probability of a nominal adjustment declines with the time since the last price change. This reflects differences over time in the flexibility of prices charged by a single store for a given good. We also detect state dependence: The probability of a nominal adjustment is highest when a store's price substantially differs from the average of other stores. However, extreme prices typically reflect the selling store's recent nominal adjustments rather than changes in other stores' prices.
File(s): File format is application/pdf http://www.chicagofed.org/digital_assets/publications/working_papers/2005/wp2005_08.pdf
Provider: Federal Reserve Bank of Chicago
Part of Series: Working Paper Series
Publication Date: 2005