Publisher:
Bar Ilan University, Department of Economics, Ramat-Gan, Israel
Inflation is painful, for firms, customers, employees, and society. But careful study of periods of hyperinflation point to ways that firms can adapt. In particular, companies need to think about how to change prices regularly and cheaply - because...
more
ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 205
Inter-library loan:
No inter-library loan
Inflation is painful, for firms, customers, employees, and society. But careful study of periods of hyperinflation point to ways that firms can adapt. In particular, companies need to think about how to change prices regularly and cheaply - because constant price changes can ultimately be very, very expensive. And they should consider how to communicate those price changes to customers. Providing clarity and predictability can increase consumer trust and help firms in the long run.
Publisher:
[Bar Ilan University, Department of Economics], [Ramat-Gan, Israel]
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...
more
ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 205
Inter-library loan:
No inter-library loan
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 0-ending 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.