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Price Setting in the Euro Area: Some Stylized Facts from Individual Producer Price Data
Author(s) -
VERMEULEN PHILIP,
DIAS DANIEL A.,
DOSSCHE MAARTEN,
GAUTIER ERWAN,
HERNANDO IGNACIO,
SABBATINI ROBERTO,
STAHL HARALD
Publication year - 2012
Publication title -
journal of money, credit and banking
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.763
H-Index - 108
eISSN - 1538-4616
pISSN - 0022-2879
DOI - 10.1111/j.1538-4616.2012.00547.x
Subject(s) - stylized fact , economics , inflation (cosmology) , producer price index , price level , price setting , monetary economics , flexibility (engineering) , mid price , competition (biology) , product (mathematics) , econometrics , macroeconomics , microeconomics , ecology , physics , geometry , management , mathematics , biology , theoretical physics
This paper summarizes the microevidence on the setting of producer prices in the euro area. The main findings are: (i) 21% of producer prices are adjusted each month, (ii) producer prices are changed more frequently and by smaller amounts than consumer prices (even after controlling for product characteristics), (iii) price decreases are relatively frequent, (iv) inflation correlates positively with the difference between the frequency of price increases and decreases, and (v) there is substantial variation in price flexibility across sectors, which can be explained in part by differences in the cost structure, the degree of competition, and the level of sectoral inflation.