Jerzy (Jurek) D. Konieczny
2006-02 EC: Temporal Distribution of Price Changes: Staggering in the Large and Synchronization in the Small (working paper)
E. Dhyne & J. Konieczny
published: 2006 | Research publication | Working Paper - Economics
ABSTRACT: Temporal distribution of individual price changes is of crucial importance for business cycle theory and for the microfoundations of price adjustment. While many researchers routinely assume that price changes are staggered over time, theoretical results are ambiguous. We use a large Belgian data set to analyze whether price changes are staggered or synchronized. We find that the more aggregated are the data, the closer is the price changing pattern to perfect staggering. This result holds both for aggregation across goods, and across locations. Our results provide support for Bhaskar's (2002) model of synchronized adjustment within, and staggered adjustment across, industries.
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revised Dec 12/06
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