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Price‐setting behaviour in Spain: evidence from micro PPI data
Author(s) -
Álvarez Luis J.,
Burriel Pablo,
Hernando Ignacio
Publication year - 2010
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.1496
Subject(s) - economics , price setting , producer price index , consumer price index (south africa) , competition (biology) , price index , wholesale price index , mid price , price level , index (typography) , limit price , microeconomics , industrial organization , monetary economics , monetary policy , ecology , world wide web , computer science , biology
This paper explores the key features of manufacturing price‐setting behaviour in Spain using an extensive micro Producer Price Index data set. The main focus is placed on the impact on the frequency of price adjustment of some explanatory variables, including the cost structure, degree of market competition, demand conditions and inflationary pressures. All these factors are found to explain cross industry heterogeneity in price stickiness. A comparison of consumer and producer price‐setting practices is also presented to ascertain the role of the retail sector in explaining price stickiness. We find some evidence that producer prices are more flexible than consumer prices. Copyright © 2010 John Wiley & Sons, Ltd.