Download This PaperPrice and Investment Dynamics: An Empirical Analysis of Plant Level Data
Uppsala University Economics Working Paper No. 2004:7
41 Pages Posted: 13 Aug 2004
Date Written: June 2004
Abstract
Price and investment equations are estimated using a unique data set for Swedish manufacturing plants. The empirical specification is based on a theoretical model of a financially constrained firm selling its output in a customer market. We find that, as predicted by our theoretical model, prices respond strongly to cost shocks but are not much affected by variations in demand and high predetermined investment is associated with a higher price.
Keywords: Cyclical price adjustment, price rigidity, price equation, countercyclical markup
JEL Classification: D43, L11, L13
Suggested Citation: Suggested Citation
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