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Price-Setting Behavior in Brazil: Survey Evidence

Price-Setting Behavior in Brazil: Survey Evidence Price surveys became popular after the seminal work of Blinder (Am Econ Rev 81(2):89–100, 1991) exploring US firms’ price-setting practices, which filled some blanks left by the simple observation of prices charged by firms. The present paper reports the findings from a survey conducted by the Central Bank of Brazil with local firms and discusses some policy implications. The sample consisted of 7002 firms and three economic sectors: manufacturing, services and commerce. Data suggest important features about price-setting behavior in Brazil: the cost of reviewing prices is low, but there is significant nominal rigidity—firms report to change prices approximately 3.6 times per year; state-dependent rules seem to be more frequent than time-dependent behavior; markup pricing appears to be the dominant strategy; and the two most important factors driving price changes in Brazil are the cost of intermediate goods and the inflation rate . http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Cycle Research Springer Journals

Price-Setting Behavior in Brazil: Survey Evidence

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Publisher
Springer Journals
Copyright
Copyright © 2018 by Springer International Publishing AG, part of Springer Nature
Subject
Economics; Macroeconomics/Monetary Economics//Financial Economics; Econometrics; Statistics for Business, Management, Economics, Finance, Insurance; Public Finance; Public Finance; Economic Growth
ISSN
2509-7962
eISSN
2509-7970
DOI
10.1007/s41549-018-0029-x
Publisher site
See Article on Publisher Site

Abstract

Price surveys became popular after the seminal work of Blinder (Am Econ Rev 81(2):89–100, 1991) exploring US firms’ price-setting practices, which filled some blanks left by the simple observation of prices charged by firms. The present paper reports the findings from a survey conducted by the Central Bank of Brazil with local firms and discusses some policy implications. The sample consisted of 7002 firms and three economic sectors: manufacturing, services and commerce. Data suggest important features about price-setting behavior in Brazil: the cost of reviewing prices is low, but there is significant nominal rigidity—firms report to change prices approximately 3.6 times per year; state-dependent rules seem to be more frequent than time-dependent behavior; markup pricing appears to be the dominant strategy; and the two most important factors driving price changes in Brazil are the cost of intermediate goods and the inflation rate .

Journal

Journal of Business Cycle ResearchSpringer Journals

Published: May 29, 2018

References