Keywords: Nominal price rigidity, frequency of price change
Abstract: This paper compares nominal price rigidity in retail stores during two 28-month periods: 1889-1891
and 1997-1999. The 1889-1891 microdata price quotes show: 1. a lower frequency of price changes;
2. a smaller average magnitude of price changes; 3. fewer "small" price changes; and, 4. fewer temporary
price reductions. These differences are consistent with the 1889-1891 period having a higher cost of
changing prices resulting in less adjustment to transitory price shocks. Changes in the retailing
environment that may have led to a higher cost of changing prices in 1889-1891 are discussed.
Full paper (219 KB PDF)
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Last update: April 29, 2005