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.
|Number of pages||24|
|Early online date||10 Mar 2022|
|Publication status||Published - Jul 2022|