Abstract

We combine two data sets to study price rigidity. The first consists of weekly time series of retail, wholesale, and spot prices for twelve products. These time series contain two exogenous cost shocks. We find that prices exhibit more rigidity in response to the second shock than the first. The second data set consists of all publicly available information about the shocks. Content analysis of these information reveals that the first shock is larger and more persistent, and the market has more information on it than the second. We conclude, therefore, that prices are more flexible in response to cost shocks that are larger, that are more persistent, and on which market participants have more information.

pdf

Additional Information

ISSN
1538-4616
Print ISSN
0022-2879
Pages
pp. 197-220
Launched on MUSE
2002-02-01
Open Access
No
Archive Status
Archived 2007
Back To Top

This website uses cookies to ensure you get the best experience on our website. Without cookies your experience may not be seamless.