This study has been developed in the context of the Eurosystem Inflation Persistence Network. It was first circulated with the title ‘Price Rigidity: Evidence from the French CPI Micro-data’. We are grateful to the INSEE (Direction des Statistiques Démographiques et Sociales) for providing access to the data, and in particular to Dominique Guédès for discussion and advice. We are grateful to Jonathan Temple (the editor) and two anonymous referees for helpful comments and suggestions. We also thank an anonymous referee of the ECB Working Paper series, as well as many colleagues and participants at the NBER Summer Institute 2004, the 2004 AFSE Conference in Paris, and seminars at the Banque de France, the European Central Bank, the INSEE and the French Ministry of the Economy, Finance and Industry. In particular we are grateful to L. Alvarez, I. Angeloni, E. Dhyne, D. Fougère, J. Galí, I. Hernando, A. Kashyap, H. Kempf, A. Levin, V. Mignon, P. Neves, D. Romer, P. Vermeulen for helpful remarks and discussions. Any remaining errors are our own. The views expressed in this paper do not necessarily reflect the opinion of the Banque de France.
What do Thirteen Million Price Records have to Say about Consumer Price Rigidity?*
Version of Record online: 10 APR 2007
Oxford Bulletin of Economics and Statistics
Volume 69, Issue 2, pages 139–183, April 2007
How to Cite
Baudry, L., Le Bihan, H., Sevestre, P. and Tarrieu, S. (2007), What do Thirteen Million Price Records have to Say about Consumer Price Rigidity?. Oxford Bulletin of Economics and Statistics, 69: 139–183. doi: 10.1111/j.1468-0084.2007.00473.x
- Issue online: 10 APR 2007
- Version of Record online: 10 APR 2007
- Final Manuscript Received: September 2006
Based on the analysis of 13 million price records underlying the computation of the French consumer price index, we provide a detailed assessment of consumer price rigidity. Our main results are as follows. The average duration of prices is around 8 months. Price durations and the patterns of price-setting strongly differ across sectors. Price cuts are almost as frequent as increases, suggesting no specific downward nominal rigidity. Price changes typically have large absolute sizes. Time variation in the frequency of price changes and in their size both contribute to inflation fluctuations. Overall there is evidence of both time- and state-dependent price-setting.