Stuck at Zero: Price Rigidity in a Runaway Inflation

Artikel

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Economics Letters ; ISSN: 0165-1765 ; Year: 2021 ; Issue: forthcoming ; Amsterdam: Elsevier

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Industrial Organization and Macroeconomics: Industrial Structure and Structural Change; Industrial Price Indices ; Market Structure, Pricing, and Design: General ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Business Economics: General ; Marketing and Advertising: General
• Subject: Sticky Prices ; Rigid Prices ; 0-Ending Price Points ; 9-Ending Price Points ; Runaway Inflation ; Hyperinflation ; Cost of Price Adjustment ; Menu Cost

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Snir, Avichai ; Chen, Haipeng (Allan) ; Levy, Daniel
• Event: Veröffentlichung
• (who): Elsevier ; ZBW - Leibniz Information Centre for Economics
• (where): Amsterdam
• (when): 2021

Further information

• DOI: doi:10.1016/j.econlet.2021.109885
• Handle: http://hdl.handle.net/10419/233762
• Last update: 10.03.2025, 11:44 AM CET