Selection Effects in Producer-Price Setting
2014 (English)Report (Other academic)
We use micro data on product prices linked to information on the firms that set them to test for selection effects (state dependence) in micro-level producer pricing. In contrast to using synthetic data from a canonical menu-cost model, we find very weak, if any, micro-level selection effects when running price change probability regressions on actual data. Moreover, when fitting a model that nests both time- and state-dependent elements (the CalvoPlus model of Nakamura and Steinsson, 2010) to the data, the resulting parameters mimic the standard Calvo (1983) model. Thus, upstream in the supply chain, price-setting is best characterized as time-dependent.
Place, publisher, year, edition, pages
Uppsala, 2014. , 34 p.
Working paper / Department of Economics, Uppsala University (Online), ISSN 1653-6975 ; 2014:6
Price-setting, Business Cycles, Micro Data
Research subject Economics
IdentifiersURN: urn:nbn:se:uu:diva-230460OAI: oai:DiVA.org:uu-230460DiVA: diva2:740718
Second fulltext is an updated version of the first fulltext.2014-08-262014-08-262014-11-03Bibliographically approved