I would like to thank George Akerlof and Christina Romer for encouragement, guidance, and countless suggestions. I would also like to thank Barry Eichengreen, Catherine Wolfram, Peter Klenow, Chris Hanes, Bill Wascher, Paul Ruud, Jeff Frank, Steve Schutt, Edward Knotek, and the diligence of a few anonymous referees and many graduate students during my time at UC Berkeley for comments and suggestions. The views presented are solely those of the author and do not necessarily represent those of the Federal Reserve Board or its staff.
Yesterday's Bad Times Are Today's Good Old Times: Retail Price Changes Are More Frequent Today Than in the 1890s
Article first published online: 20 NOV 2007
Journal of Money, Credit and Banking
Volume 39, Issue 8, pages 1987–2020, December 2007
How to Cite
KACKMEISTER, A. (2007), Yesterday's Bad Times Are Today's Good Old Times: Retail Price Changes Are More Frequent Today Than in the 1890s. Journal of Money, Credit and Banking, 39: 1987–2020. doi: 10.1111/j.1538-4616.2007.00095.x
- Issue published online: 20 NOV 2007
- Article first published online: 20 NOV 2007
- Received March 17, 2006; and accepted in revised form December 20, 2006.
- nominal price rigidity;
- frequency of price change;
- price flexibility;
- price history;
- micro-data prices;
- cost of changing prices
This paper documents differences in the nominal rigidity of retail prices across two 28-month periods: 1889–91 and 1997–99. The most striking finding is that prices changed much less frequently in 1889–91. In the late-1800s when price changes did occur they were smaller on average and more narrowly distributed with fewer small or large price changes. Further, price changes were more permanent 100-plus years ago. These differences are consistent with a high occurrence of temporary price shocks and a higher cost of changing prices in 1889–91 than in 1997–99.