Temporal Distribution of Price Changes: Staggering in the Large and Synchronization in the Small

National Bank of Belgium Working Paper No. 116

52 Pages Posted: 6 Oct 2010

See all articles by Emmanuel Dhyne

Emmanuel Dhyne

National Bank of Belgium

Jerzy Konieczny

Wilfrid Laurier University

Date Written: June 28, 2007

Abstract

Temporal distribution of individual price changes is of crucial importance for business cycle theory and for the micro-foundations of price adjustment. While it is routinely assumed that price changes are staggered over time, both theory and evidence are ambiguous. We use a large Belgian data set to analyze whether price changes are staggered or synchronized. We find that the more aggregate the data, the closer the distribution to perfect staggering. This result holds for both aggregation across goods and across locations. Our results provide support for Bhaskar’s (2002) model of synchronized adjustment within, and staggered adjustment across, industries.

Keywords: staggering, synchronization, aggregation, price setting

JEL Classification: E31, L16, D21, L11

Suggested Citation

Dhyne, Emmanuel and Konieczny, Jerzy, Temporal Distribution of Price Changes: Staggering in the Large and Synchronization in the Small (June 28, 2007). National Bank of Belgium Working Paper No. 116. Available at SSRN: https://ssrn.com/abstract=1687540 or http://dx.doi.org/10.2139/ssrn.1687540

Emmanuel Dhyne (Contact Author)

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Jerzy Konieczny

Wilfrid Laurier University ( email )

Department of Economics
Waterloo, Ontario N2L 3C5
Canada
519-884-0710 x2238 (Phone)
519-884-0201 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
20
Abstract Views
472
PlumX Metrics