Scandinavian Working Papers in Economics

Working Paper Series,
Sveriges Riksbank (Central Bank of Sweden)

No 128: Micro Foundations of Macroeconomic Price Adjustment: Survey Evidence from Swedish Firms

Mikael Apel (), Richard Friberg () and Kerstin Hallsten ()
Additional contact information
Mikael Apel: National Institute for Economic Research
Richard Friberg: Department of Economics, Postal: Stockholm School of Economics, Box 6501, SE-113 83 Stockholm, Sweden
Kerstin Hallsten: Monetary Policy Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

Abstract: This paper reports the results from a survey on price-setting behavior of a large random sample of Swedish firms. Prices are found to adjust only infrequently; the median firm adjusts the price once a year. State-dependent pricing is found to be more common than is usually assumed and at least as important as time-dependent pricing. The paper sums up the evidence from this and two similar large-scale surveys on UK and US data. Notably, and suggesting directions for further research, four of the theories of price rigidity are ranked by the respondents among the top-five places in all three studies.

Keywords: Nominal rigidity; Price-rigidity; Price-setting; Real rigidity; Time-dependent pricing; State-dependent pricing

JEL-codes: D40; E30; L11

40 pages, December 1, 2001

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Published as
Mikael Apel, Richard Friberg and Kerstin Hallsten, (2005), 'Microfoundations of Macroeconomic Price Adjustment: Survey Evidence from Swedish Firms', Journal of Money, Credit and Banking, vol 37, pages 313-338

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