Journal article
Stuck at zero: Price rigidity in a runaway inflation
Economics letters, Vol.204(forthcoming), pp.1-5
07/01/2021
DOI: 10.1016/j.econlet.2021.109885
Abstract
We use micro level retail price data from convenience stores to study the link between 0-ending price points and price rigidity during a period of a runaway inflation, when the annual inflation rate was in the range of 60%–430%. Surprisingly, we find that more round prices are less likely to adjust, and when they do adjust, the average adjustments are larger. These findings suggest that price adjustment barriers associated with round prices are strong enough to cause a systematic delay in price adjustments even in a period of a runaway inflation, when 85 percent of the prices change every month.
•We use retail store-level price data from a period in which inflation reached 430%.•We assess the rigidity of round prices.•We find that the rounder the prices are, the less likely they are to change.•When round prices do change, then the change is larger.•Price changes are delayed even in periods when 85% of prices change every month.
Details
- Title: Subtitle
- Stuck at zero: Price rigidity in a runaway inflation
- Creators
- Avichai Snir - Netanya Academic CollegeHaipeng (Allan) Chen - University of KentuckyDaniel Levy - Bar-Ilan University
- Resource Type
- Journal article
- Publication Details
- Economics letters, Vol.204(forthcoming), pp.1-5
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.econlet.2021.109885
- ISSN
- 0165-1765
- eISSN
- 1873-7374
- Language
- English
- Date published
- 07/01/2021
- Academic Unit
- Marketing
- Record Identifier
- 9984618641902771
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