Regulated and Services' Prices and Inflation Persistence

39 Pages Posted: 20 May 2005

See all articles by Patrick Lunnemann

Patrick Lunnemann

Banque Central du Luxembourg

Thomas Y. Mathä

Banque centrale du Luxembourg

Date Written: April 2005

Abstract

This paper analyses the degree of price rigidity and of inflation persistence across different product categories with particular focus on regulated prices and services for the individual EU15 countries, as well as for the EU15 and the euro area aggregates. We show that services and HICP sub-indices considered being subject to price regulation exhibit larger degrees of nominal price rigidities, with less frequent but larger price index changes as well as stronger asymmetries between price index increases and decreases. With regard to what extent services and regulated prices contribute to the degree of overall inflation persistence, we find that, for most of the EU15 countries as well as for the EU15 and the euro area aggregates, excluding services from the full HICP results in a reduction in the measured degree of inflation persistence; for regulated indices such an effect is also discernible, albeit to a lesser extent.

Keywords: Price rigidity, inflation persistence, regulated prices, services

JEL Classification: E31, C22, C23, C43

Suggested Citation

Lunnemann, Patrick and Mathä, Thomas Y., Regulated and Services' Prices and Inflation Persistence (April 2005). ECB Working Paper No. 466, Available at SSRN: https://ssrn.com/abstract=691862

Patrick Lunnemann (Contact Author)

Banque Central du Luxembourg ( email )

2, boulevard Royal
L-2983 Luxembourg
Luxembourg

Thomas Y. Mathä

Banque centrale du Luxembourg ( email )

2, bd Royal
L-2983 Luxembourg
Luxembourg
+352 4774 4270 (Phone)
+352 4774 4920 (Fax)

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