Consumer Price Adjustment Under the Microscope: Germany in a Period of Low Inflation
109 Pages Posted: 20 Jul 2006
Date Written: July 2006
We analyse the adjustment of retail and services prices in a period of low inflation, using a set of individual price data from the German Consumer Price Index that covers the years 1998 to 2003. We strong find evidence of time- and state-dependent price adjustment. Most importantly, the differences in "unconditional" sectoral price flexibility are found to be linked to input price volatility.
Keywords: price rigidity, price flexibility, Consumer Price Index, Germany
JEL Classification: E31, D43, L11
Suggested Citation: Suggested Citation