Sticky Prices in the Euro Area: A Summary of New Micro Evidence

27 Pages Posted: 15 Dec 2005

See all articles by Luis J. Álvarez

Luis J. Álvarez

Banco de España

Emmanuel Dhyne

National Bank of Belgium

Marco Hoeberichts

De Nederlandsche Bank - Research Department

Claudia Kwapil

Oesterreichische Nationalbank

Hervé le Bihan

Banque de France - Centre de Recherche

Patrick Lunnemann

Banque Central du Luxembourg

Fernando Martins

Bank of Portugal - Research Department; University of Lisbon - School of Economics and Management; Universidade Lusíada, Lisboa

Roberto Sabbatini

Bank of Italy

Harald Stahl

Deutsche Bundesbank - Economics Department

Philip Vermeulen

European Central Bank (ECB)

Jouko Vilmunen

Bank of Finland, Research Unit

Multiple version iconThere are 2 versions of this paper

Date Written: December 2005

Abstract

This paper presents original evidence on price setting in the euro area at the individual level. We use micro data on consumer (CPI) and producer (PPI) prices, as well as survey information. Our main findings are: (i) prices in the euro area are sticky and more so than in the US; (ii) there is evidence of heterogeneity and of asymmetries in price setting behaviour; (iii) downward price rigidity is only slightly more marked than upward price rigidity and (iv) implicit or explicit contracts and coordination failure theories are important, whereas menu or information costs are judged much less relevant by firms.

Keywords: Price setting, price stickiness, consumer prices, producer prices, survey data

JEL Classification: C25, D40, E31

Suggested Citation

Álvarez, Luis J. and Dhyne, Emmanuel and Hoeberichts, Marco M. and Kwapil, Claudia and Le Bihan, Herve and Lunnemann, Patrick and Martins, Fernando and Sabbatini, Roberto and Stahl, Harald and Vermeulen, Philip and Vilmunen, Jouko, Sticky Prices in the Euro Area: A Summary of New Micro Evidence (December 2005). ECB Working Paper No. 563. Available at SSRN: https://ssrn.com/abstract=868436

Luis J. Álvarez (Contact Author)

Banco de España ( email )

Madrid 28014
Spain

Emmanuel Dhyne

National Bank of Belgium ( email )

Brussels, B-1000
Belgium

Marco M. Hoeberichts

De Nederlandsche Bank - Research Department ( email )

P.O. Box 98
1000 AB Amsterdam
Netherlands
+31-20-524 2890 (Phone)
+31-20-524 2529 (Fax)

Claudia Kwapil

Oesterreichische Nationalbank ( email )

Otto-Wagner Platz 3
POB 61
Vienna 1011
Austria

Herve Le Bihan

Banque de France - Centre de Recherche ( email )

31 rue Croix des Petits Champs
Room 41-1391
75049 Paris Cedex 01
France

Patrick Lunnemann

Banque Central du Luxembourg ( email )

2, boulevard Royal
L-2983 Luxembourg
Luxembourg

Fernando Martins

Bank of Portugal - Research Department ( email )

Av. Almirante Reis 71, 6th
Lisbon 1150-012
Portugal

University of Lisbon - School of Economics and Management ( email )

Rua do Quelhas, n.º 6
Lisbon, 1200-781
Portugal

Universidade Lusíada, Lisboa ( email )

Rua da Junqueira, 188 - 198
Lisboa, 1349-001
Portugal

Roberto Sabbatini

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Harald Stahl

Deutsche Bundesbank - Economics Department ( email )

Wilhelm-Epstein-Strasse 14
60431 Frankfurt am Main
Germany

Philip Vermeulen

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Jouko Vilmunen

Bank of Finland, Research Unit ( email )

P.O. Box 160
FIN-00101 Helsinki
Finland

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