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Swiss Journal of Economics and Statistics

, Volume 145, Issue 3, pp 293–349 | Cite as

Price-setting behaviour in Switzerland: Evidence from CPI micro data

  • Daniel Kaufmann
Open Access
Article

Summary

This paper investigates price-setting behaviour of firms based on the individual price quotes underlying the Swiss consumer price index. The data set covers the years from 1993 to 2005. Six main findings emerge from the analysis. (i) Prices are sticky; the median duration amounts to 4.6 quarters. (ii) Price-setting behaviour is heterogeneous across sectors and outlet characteristics. (iii) Price changes are sizeable; the median absolute size amounts to 9.4%. (iv) There is little evidence of downward price stickiness; almost half of all price changes are decreases. An exception is the service sector, however, where there is evidence of asymmetries in price-setting due to downward rigid wages. (v) Firms respond to expected cost shocks at the date of their occurrence; VAT rate changes do not lead to more price adjustments before they take effect. (vi) There is some evidence that firms adjust their behaviour according to the state of the economy; in particular, firms facing higher rates of inflation adjust prices more frequently.

JEL-Classification

E31 D40 

Keywords

CPI data pricesetting frequency of price changes nominal price rigidity time-dependent pricing state-dependent pricing 

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Copyright information

© Swiss Society of Economics and Statistics 2009

Authors and Affiliations

  1. 1.Swiss National Bank, Economic AnalysisZurichSwitzerland

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