• norsk
    • English
  • norsk 
    • norsk
    • English
  • Logg inn
Vis innførsel 
  •   Hjem
  • Norges Handelshøyskole
  • Thesis
  • Master Thesis
  • Vis innførsel
  •   Hjem
  • Norges Handelshøyskole
  • Thesis
  • Master Thesis
  • Vis innførsel
JavaScript is disabled for your browser. Some features of this site may not work without it.

Price change frictions in production plants : learning from a simulation study

Bøe, Eivind; Vange, Magne
Master thesis
Thumbnail
Åpne
masterthesis.PDF (710.8Kb)
Permanent lenke
http://hdl.handle.net/11250/2404458
Utgivelsesdato
2016
Metadata
Vis full innførsel
Samlinger
  • Master Thesis [4657]
Sammendrag
Price stickiness is often taken for granted in modern macroeconomic models, without

adequate knowledge of the underlying microeconomic foundations. We want to assess

whether the assumptions of price stickiness are consistent with actual pricing patterns.

There is a broad consensus in the literature that prices exhibit a pattern of inaction

followed by large price changes, so called “zeros and lumps”. A key topic, however, is

how to explain the observance of small price changes. This thesis proposes a model

specification which sets out to explain small price adjustments, as well as inaction

and large price changes.

We search for evidence of thresholds and inertia in producer price data. Parameters

are estimated using a Simulated Method of Moments (SMM) approach, based on

yearly product specific price observations from the Norwegian manufacturing industry.

In the simulation model, the adjustment towards the frictionless price is conditional

on thresholds and partial adjustments. Price frictions seem to play a major role in

explaining how producers change prices, as modeling with friction parameters gives

a much better fit than frictionless modeling.

Overall, the evidence in this thesis supports assumptions of nominal stickiness. We

find evidence of both thresholds and inertia in the price setting, which indicates that

prices are affected by different forms of rigidities. Even when we control for inflation,

our findings suggest that there are more frictions downwards than upwards. Thus, we

can cannot exclude the possibility that it is easier to increase than to decrease prices.

An assessment of the literature shows that, in general, macroeconomic models fail to

include all the evidence presented in this thesis. While some models assume that firms

have pricing thresholds, others assume inertia in the price setting. However, none of

the models considered incorporates the combination of both features. Our findings

therefore suggest new ways in which macroeconomic models can be improved.

Kontakt oss | Gi tilbakemelding

Personvernerklæring
DSpace software copyright © 2002-2019  DuraSpace

Levert av  Unit
 

 

Bla i

Hele arkivetDelarkiv og samlingerUtgivelsesdatoForfattereTitlerEmneordDokumenttyperTidsskrifterDenne samlingenUtgivelsesdatoForfattereTitlerEmneordDokumenttyperTidsskrifter

Min side

Logg inn

Statistikk

Besøksstatistikk

Kontakt oss | Gi tilbakemelding

Personvernerklæring
DSpace software copyright © 2002-2019  DuraSpace

Levert av  Unit