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Wilfrid Laurier University School of Business & Economics
April 16, 2014
 
 
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2003-09 EC: Inflation And Price Setting In A Natural Experiment (Working Paper)


Konieczny, J.D., & Skrzypacz, A.

published: 2003 | Research publication | Working Paper - Economics

ABSTRACT  We analyze the behavior of price setters in Poland during the transition from a planned to a market economy, using a large disaggregated data set. The size and frequency of price changes, as well as relative price variability, all increase as inflation rises. The effect of expected inflation on relative price variability is much stronger than the effect of unexpected inflation. Despite the unusual economic environment, the results are qualitatively identical, and quantitatively stronger, than those in Lach and Tsiddon (1992).

Keywords: Inflation, Relative Price Variability, Menu Costs, Transition Economies.

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