Abstract
This paper investigates the micro-foundations of pricing behaviour using monthly producer prices for Norwegian multi-product firms. We find both infrequent and many small price changes together with a high degree of within-firm synchronization. This points at fixed menu costs featuring scope economies, at additional linear and convex price adjustment costs, and at the presence of firm-specific shocks. The structural estimates and a simulation support the view that in order to understand pricing behaviour and the effectiveness of monetary policy, the analysis of multi-product firms and a richer price adjustment technology in the intermediate goods sector is valuable.
Original language | English |
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Pages (from-to) | 746-769 |
Number of pages | 24 |
Journal | Economica |
Volume | 89 |
Issue number | 355 |
Early online date | 10 Mar 2022 |
DOIs | |
Publication status | Published - Jul 2022 |
Keywords
- MODELS
- INFLATION
- ADJUSTMENTS
- PRICES