TY - JOUR
T1 - Stuck at zero
T2 - Price rigidity in a runaway inflation
AU - Snir, Avichai
AU - Chen, Haipeng (Allan)
AU - Levy, Daniel
N1 - Publisher Copyright:
© 2021 Elsevier B.V.
PY - 2021/7
Y1 - 2021/7
N2 - 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.
AB - 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.
KW - 0-ending price points
KW - 9-ending price points
KW - Cost of price adjustment
KW - Menu cost
KW - Runaway inflation
KW - Sticky prices/rigid prices
UR - http://www.scopus.com/inward/record.url?scp=85105295337&partnerID=8YFLogxK
U2 - 10.1016/j.econlet.2021.109885
DO - 10.1016/j.econlet.2021.109885
M3 - ???researchoutput.researchoutputtypes.contributiontojournal.article???
AN - SCOPUS:85105295337
SN - 0165-1765
VL - 204
JO - Economics Letters
JF - Economics Letters
M1 - 109885
ER -